SCHEDULE 14A
(RULE 14A-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
[ ] Confidential, For Use of the Commission Only
(as permitted by Rule 14a-6(e) (2))
SUNBEAM CORPORATION
(Name of Registrant as Specified in Its Charter)
SUNBEAM CORPORATION
(Name of Persons(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[ ] Fee computed on the table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
(2) Form, Schedule or Registration Statement No.:
(3) Filing Party:
(4) Date Filed:
[GRAPHIC OMITTED]
SUNBEAM CORPORATION
2381 EXECUTIVE CENTER DRIVE
BOCA RATON, FLORIDA 33431
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 27, 2000
To the Stockholders of Sunbeam Corporation:
Notice is hereby given to the stockholders of Sunbeam Corporation, a
Delaware corporation (the "Company"), that the 2000 Annual Meeting of
Stockholders of the Company (the "Annual Meeting") will be held at the Company's
offices located at 2381 Executive Center Drive, Boca Raton, Florida 33431 on
Tuesday, June 27, 2000, at 10:00 a.m. (local time), for the following purposes:
1. To elect the following eight (8) nominees for Directors of the
Company: Philip E. Beekman, Charles M. Elson, Howard Gittis, John
H. Klein, Jerry W. Levin, David J. Pecker, James D. Robinson III,
and Faith Whittlesey (for terms to expire at the next Annual
Meeting of Stockholders of the Company) (Proposal No. 1);
2. To approve the grant of stock options to Jerry W. Levin, the
Company's Chairman and Chief Executive Officer, pursuant to his
Employment Agreement with the Company (Proposal No. 2);
3. To approve the grant of stock options to Paul E. Shapiro, the
Company's Executive Vice President and Chief Administrative
Officer, pursuant to his Employment Agreement with the Company
(Proposal No. 3);
4. To approve the grant of stock options to Bobby G. Jenkins, the
Company's Executive Vice President and Chief Financial Officer,
pursuant to his Employment Agreement with the Company (Proposal No.
4);
5. To approve an amendment to the Sunbeam Corporation Management
Incentive Plan (Proposal No. 5);
6. To approve the adoption of the Sunbeam Corporation Key Executive
Long Term Incentive Plan (Proposal No. 6);
7. To approve the adoption of the Sunbeam Corporation 2000 Option Plan
(Proposal No. 7); and
8. To transact such other business as may properly come before the
Annual Meeting or any postponement or adjournment thereof,
including matters that the officers of the Company may deem
appropriate, and stockholder proposals, if any, which are required
to be included in the proxy materials by the rules and regulations
of the Securities and Exchange Commission.
The close of business on May 8, 2000 has been fixed as the record date
for the determination of the stockholders of the Company entitled to notice of,
and to vote at, the Annual Meeting, and only stockholders of record at that time
will be entitled to notice of, and to vote at, the Annual Meeting and at any
postponement or adjournment thereof.
Stockholders who do not expect to attend the Annual Meeting in person
are urged to sign, date and promptly return the proxy card that is enclosed
herewith.
By Order of the Board of Directors.
Barbara L. Allen
Secretary
May 11, 2000
SUNBEAM CORPORATION
PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 27, 2000
This Proxy Statement is being furnished in connection with the
solicitation by the Board of Directors and management of Sunbeam Corporation, a
Delaware corporation (the "Company" or "Sunbeam"), of proxies for use at the
Annual Meeting of Stockholders of the Company (the "Annual Meeting") to be held
at the Company's offices located at 2381 Executive Center Drive, Boca Raton,
Florida 33431 on Tuesday, June 27, 2000, at 10:00 a.m. (local time), and at any
and all postponements or adjournments thereof, for the purposes set forth in the
accompanying Notice of Annual Meeting. This Proxy Statement, Notice of Annual
Meeting and accompanying proxy card are first being mailed to stockholders on or
about May 11, 2000.
RECORD DATE; VOTING
As of the close of business on May 8, 2000, the date fixed by the
Company's Board of Directors (the "Board of Directors") as the record date (the
"Record Date") for determining the stockholders of the Company entitled to
receive notice of, and to vote at, the Annual Meeting or any postponements or
adjournments thereof, the Company had outstanding 107,558,065 shares of common
stock, par value $.01 per share (the "Common Stock"). Only holders of record on
the Record Date will be entitled to notice of, and to vote at, the Annual
Meeting or any postponements or adjournments thereof. Each share of Common Stock
entitles the holder thereof to cast one vote on each matter to be considered at
the Annual Meeting. The presence at the Annual Meeting, in person or by proxy,
of a majority of the issued and outstanding shares of Common Stock entitled to
vote will constitute a quorum. Shares of Common Stock presented in person or
represented by proxy (including shares which abstain or withhold a vote with
respect to one or more of the matters presented for stockholder approval) will
be counted for purposes of determining whether a quorum is present.
The proposals to be voted on are the election of eight (8) directors
(Proposal No. 1), the grants of stock options to Jerry W. Levin, the Company's
Chairman and Chief Executive Officer, Paul E. Shapiro, the Company's Executive
Vice President and Chief Administrative Officer, and Bobby G. Jenkins, the
Company's Executive Vice President and Chief Financial Officer (Proposals 2, 3,
and 4), an amendment to the Sunbeam Corporation Management Incentive Plan (the
"Incentive Plan") (Proposal No. 5), the adoption of the Sunbeam Corporation Key
Executive Long Term Incentive Plan (the "LTIP") (Proposal No. 6), and the
adoption of the Sunbeam Corporation 2000 Option Plan (the "2000 Option Plan")
(Proposal No. 7). The Company has no knowledge of any other matters to be
brought before the Annual Meeting. The deadline for receipt by the Secretary of
the Company of stockholder proposals for inclusion at the Annual Meeting was
January 16, 2000, and no proposals were received. However, if any other matters
are properly presented at the Annual Meeting for action, in the absence of other
instructions, the persons named in the enclosed proxy and acting thereunder will
vote in accordance with their judgment on such matters.
Brokers holding shares for beneficial owners who do not provide voting
instructions with respect to Proposal Nos. 2, 3, 4, 5, 6 and 7 are prohibited
from exercising discretionary authority with respect to such matters, and such
shares may not be voted by brokers who do not receive voting instructions from
their clients with respect to such matters ("broker non-votes") and therefore
are not entitled to vote.
Approval of the proposal to elect the nominees as Directors of the
Company will require the affirmative vote of a plurality of the votes cast by
the holders of shares of Common Stock present in person or by proxy and entitled
to vote on the matter. In tabulating the vote, votes that are withheld with
respect to a nominee will be disregarded and will have no effect on the outcome
of such vote.
Approval of the proposals to approve grants of stock options to Messrs.
Levin, Shapiro, and Jenkins (Proposal Nos. 2, 3 and 4), and the proposal to
adopt the 2000 Option Plan (Proposal No. 7), will require the affirmative vote
of a majority of the votes cast by the holders of shares of Common Stock present
in person or by proxy at the Annual Meeting, provided that the number of total
votes cast on the proposals must be more than 50% of all shares entitled to vote
on the matter. In determining whether Proposals 2, 3, 4 and 7 have each received
the requisite number of votes, broker non-votes will have no effect on the
outcome of such votes and abstentions will have the effect of votes against
such proposals.
Approval of the proposals to approve the amendment to the Incentive
Plan (Proposal No. 5) and to approve the adoption of the LTIP (Proposal No. 6)
will require the affirmative vote of the holders of a majority of the shares of
Common Stock present in person or by proxy at the Annual Meeting and entitled to
vote on the matter. In determining whether Proposals No. 5 and 6 have each
received the requisite number of votes, broker non-votes will have no effect on
the outcome of such votes and abstentions will have the effect of votes against
such proposals.
VOTING OF PROXIES; REVOCATION
If the accompanying proxy card is properly signed and returned to the
Company, the shares of Common Stock represented thereby will be voted as
specified therein. If no specification is made, the shares will be voted in
accordance with the recommendations of the Board of Directors which is "FOR"
proposals one through seven. The proxy may, nevertheless, be revoked prior to
its exercise by delivering written notice of revocation to the Secretary of the
Company at 2381 Executive Center Drive, Boca Raton, Florida 33431, by executing
a later dated proxy or by attending the Annual Meeting and voting in person.
Attendance at the Annual Meeting will not in and of itself constitute a
revocation of a proxy.
PROPOSAL 1 - ELECTION OF THE FOLLOWING EIGHT (8) NOMINEES FOR DIRECTORS
The Company's By-Laws provide that the Board of Directors will consist
of not less than three nor more than twelve persons as fixed from time to time
by a vote of a majority of the entire Board of Directors. The Board of Directors
has fixed the number of Directors of the Company at eight. At the Annual
Meeting, Directors of the Company will be elected to serve terms expiring at the
next Annual Meeting of Stockholders of the Company or until their successors are
elected and have been qualified. The Board of Directors has no reason to believe
that any of the nominees will not serve if elected, but if any of them should
become unavailable to serve as a Director of the Company, and if the Board of
Directors designates a substitute nominee, the persons named as proxies will
vote for the substitute nominee designated by the Board of Directors.
The names of the nominees, their principal occupations and the year in
which each current Director of the Company initially joined the Board of
Directors are set forth below.
JERRY W. LEVIN, age 56, was appointed Chief Executive Officer,
President and a Director of Sunbeam in June 1998 and was elected as Chairman of
the Board of Directors in March 1999. Mr. Levin has served as Chairman of the
Board and Chief Executive Officer of The Coleman Company, Inc. ("Coleman") since
August 1998 and as Chief Executive Officer of Coleman from June 1998 to August
1998. Mr. Levin previously held the position of Chairman and Chief Executive
Officer of Coleman from February 1997 until its acquisition by Sunbeam in March
1998. Mr. Levin was also the Chairman of Coleman from 1989 to 1991. Mr. Levin
was Chairman of the Board of Revlon, Inc. ("Revlon") from November 1995 until
June 1998, Chief Executive Officer of Revlon from 1992 until January 1997, and
President of Revlon from 1991 to 1995. Mr. Levin has been Executive Vice
President of MacAndrews & Forbes Holdings, Inc. ("MacAndrews & Forbes") since
March 1989. For 15 years prior to joining MacAndrews & Forbes, Mr. Levin held
various senior executive positions with The Pillsbury Company. Mr. Levin is also
a member of the Boards of Directors of Revlon, Ecolab, Inc., and U.S. Bancorp,
Inc. For a description of certain arrangements entered into by Sunbeam and
MacAndrews & Forbes relating to the services of Mr. Levin as an officer of
Sunbeam, see "Certain Relationships and Related Transactions-Services Provided
by MacAndrews & Forbes." See "Security Ownership of Certain Beneficial Owners".
PHILIP E. BEEKMAN, age 68, has been a Director of Sunbeam since June
1999. Mr. Beekman is President of Owl Hollow Enterprises Inc., a position he has
held since July 1994. From December 1986 to July 1994, he was Chairman and Chief
Executive Officer of Hook SUPERX, a retail drug store chain. Mr. Beekman also is
a member of the Boards of Directors of General Chemical Group, Inc., Linens 'N
Things, Inc., The Kendle Company and Procure Net Inc..
CHARLES M. ELSON, age 40, has been a Director of Sunbeam since his
appointment to the Board of Directors in September 1996. Mr. Elson was a
Director of Coleman from March 30, 1998 until June 24, 1998. Mr. Elson has been
a Professor of Law at Stetson University College of Law since 1990 and serves as
Of Counsel to the law firm of Holland & Knight since May 1995. Mr. Elson has
been appointed Edgar S. Woolard, Jr. Professor of Corporate Governance and
Director, Center for Corporate Governance at University of Delaware, beginning
September 2000. He was a Visiting Professor at the University of Maryland School
of Law from August 1998 to
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December 1998, and at the Cornell Law School from January 1996 to June 1996.
Mr. Elson is also a Member of the American Law Institute and the Advisory
Council and Commissions on Director Compensation, Director Professionalism, CEO
Succession and Audit Committees of the National Association of Corporate
Directors. He is Trustee of Talledega College, a Director of the Investor
Responsibility Research Center and a Salvatori Fellow of the Heritage
Foundation. Mr. Elson is also a director of Nuevo Energy Company.
HOWARD GITTIS, age 66, was appointed to the Board of Directors of
Sunbeam in June 1998. Mr. Gittis has been a Director, Vice Chairman and Chief
Administrative Officer of MacAndrews & Forbes and certain of its affiliates
since 1985. Mr. Gittis is also a member of the Board of Directors of Golden
State Bancorp Inc., Golden State Holdings Inc., Jones Apparel Group, Inc., Loral
Space & Communications Ltd., M & F Worldwide Corp., Panavision Inc., Revlon
Consumer Products Corporation, Revlon, Inc., REV Holdings Inc. and
Rutherford-Moran Oil Corporation.
JOHN H. KLEIN, age 54, was appointed to the Board of Directors in
February 1999. Mr. Klein is Chairman and Chief Executive Officer of Bi-Logix,
Inc. and Strategic Business and Technology Solutions LLC, and is Chairman of
CyBear, positions he has held since mid-1998. From April 1996 to May 1998, he
was Chairman and Chief Executive Officer of MIM Corporation, a provider of
pharmacy benefit services to medical groups. Prior to that he served as
President of IVAX North American Multi-Source Pharmaceutical Group from January
1995 and as President and Chief Executive Officer of Zenith Laboratories, a
generic pharmaceutical manufacturer from May 1989 to 1995.
DAVID J. PECKER, age 48, a nominee for election as a Director, has been
President, Chief Executive Officer and Chief Operating Officer of American
Media, Inc. since May 1999. From 1991 to 1999, Mr. Pecker was President, and
from 1992 to 1999, was Chief Executive Officer of Hachette Filipacchi Magazines
("Hachette"). From 1990 to 1992, Mr. Pecker was Executive Vice President, Chief
Operating Officer and Chief Financial Officer of Hachette, and during 1999, was
also Executive Vice President/Publishing for Hachette. Prior to 1990, Mr. Pecker
held various financial positions with Diamandis Communications Inc., a
predecessor of Hachette, and with CBS, Inc. Prior to joining CBS, he was Senior
Auditor at PricewaterhouseCoopers. Mr. Pecker is a Director of Next Generation
Network.
JAMES D. ROBINSON III, age 64, is a nominee for election as a Director.
Mr. Robinson co-founded RRE Investors, LLC and has served as its Chairman and
Chief Executive Officer since 1994. Mr. Robinson has also served as Chairman of
Violy, Bijorum & Partners Holdings since 1996, and served as Chairman and Chief
Executive Officer of American Express Company from 1977 to 1993, after serving
in various executive positions at American Express Company. Mr. Robinson serves
on the Boards of Directors of Coca-Cola Corporation, Bristol-Myers Squibb
Company, FirstData Corporation, Cambridge Technology Partners and Concur
Technologies, Inc.
FAITH WHITTLESEY, age 61, has been a Director of Sunbeam since her
appointment to the Board of Directors in December 1996. Mrs. Whittlesey has
served as the Chief Executive Officer of the American Swiss Foundation, an
educational foundation, since 1991. She is also a member of the Board of
Directors of Valassis Communications, Inc.
Approval of this proposal will require the affirmative vote of a
plurality of the votes cast by the holders of shares of Common Stock present in
person or by proxy and entitled to vote on the matter. In tabulating the vote,
votes that are withheld with respect to a nominee will be disregarded and will
have no effect on the outcome of such vote.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR"
THE ELECTION OF THE FOREGOING NOMINEES AS DIRECTORS OF THE COMPANY
DIRECTORS' COMPENSATION
During 1999, each of the Directors of the Company who were not
employees of either the Company or an affiliate ("Outside Directors") received a
$10,000 annual retainer and $1,000 for each meeting of the Board of Directors or
its Committees attended by such Outside Director, whether in person or by
telephone. In addition, pursuant to the Amended and Restated Sunbeam Corporation
Stock Option Plan (the "Option Plan"), each of the Outside Directors was
automatically granted 1,500 shares of restricted stock upon his or her initial
election or
3
appointment to the Board of Directors or upon each subsequent re-election to the
Board of Directors (prorated in case of an election or appointment at any time
other than at an annual meeting of stockholders). Such restricted stock vested
immediately upon the Outside Director's acceptance of his or her election or
appointment.
In February 2000, the Compensation Committee and the Board of Directors
approved a new non-employee Directors' compensation program consisting of (i) an
annual retainer of $25,000, (ii) a fee of $1,000 for each Board or Committee
meeting attended by a Director, whether in person or by telephone, (iii) a
$2,000 annual fee for each Committee Chairmanship, and (iv) an annual grant of
an option to purchase 5,000 shares of Common Stock to be granted on the date of
election of a non-employee Director and upon each subsequent re-election, having
an exercise price equal to the Fair Market Value (as defined in the 2000 Option
Plan) on the date of grant, and vesting at the rate of one-third on each
anniversary of the date of grant.
Directors are also reimbursed for all ordinary and necessary
out-of-pocket expenses incurred by them in attending meetings of the Board of
Directors or its Committees.
COMMITTEES OF THE BOARD OF DIRECTORS; BOARD OF DIRECTORS AND COMMITTEE MEETINGS
During 1999, the Board of Directors held seven meetings and took action
by written consent one time. As permitted by the By-Laws of the Company, the
Company has several standing committees, including an Audit Committee, an
Executive Committee and a Compensation Committee. The Executive Committee also
serves as the Nominating Committee. Following the Annual Meeting, the Board of
Directors will also have a Corporate Governance Committee.
The Executive Committee of the Board of Directors currently consists of
Jerry W. Levin (Chairman), Howard Gittis, Peter Langerman (who is not standing
for re-election) and Howard Kristol (who is not standing for re-election). The
Executive Committee has the authority to act in place of the Board of Directors
on all matters that would otherwise come before the Board of Directors to the
fullest extent permitted by Delaware law. In 1999, the Executive Committee met
three times and took action by written consent two times. Following the Annual
Meeting, subject to election of the nominees for Directors, the Executive
Committee will consist of Jerry W. Levin (Chairman), Howard Gittis and James D.
Robinson, III.
The Executive Committee acted as the Company's Nominating Committee for
purposes of considering nominees for election as Directors. The Executive
Committee did not hold any separate meetings during 1999 in its capacity as the
Nominating Committee.
The Audit Committee of the Board of Directors currently consists of
Howard Kristol (Chairman), Philip Beekman, Charles M. Elson and Faith
Whittlesey. The Audit Committee's primary responsibilities are set forth in the
Audit Committee charter, a copy of which is attached hereto as Appendix A. The
Audit Committee met eight times during 1999 and took action by written consent
one time during 1999. Following the Annual Meeting, subject to the election of
the nominees for Directors, the Audit Committee will consist of Philip Beekman
(Chairman), Charles M. Elson, James D. Robinson, III (Vice-Chairman) and John H.
Klein, and such members of the Audit Committee are all "independent" within the
meaning of Sections 303.01 (B) (2) (a) and (B) (3) of the New York Stock
Exchange Listing Manual.
Compensation issues are the responsibility of the Compensation
Committee, which currently consists of Howard Gittis (Chairman), John H. Klein
and Faith Whittlesey. The Compensation Committee is responsible for establishing
the general compensation policies of the Company, compensation levels for its
executive officers, and administering the benefit plans of the Company in which
the Company's officers participate, including the Option Plan and Incentive
Plan, as well as the LTIP and the 2000 Option Plan, if approved at the Annual
Meeting. In 1999, the Compensation Committee met seven times. Following the
Annual Meeting, subject to the election of the nominees for Directors, the
Compensation Committee will consist of Howard Gittis (Chairman), John H. Klein,
David J. Pecker and Faith Whittlesey.
Each of the Company's incumbent Directors attended (either in person or
by telephone) 100% of the aggregate number of meetings of the Board of Directors
held during 1999, and at least 75% of the aggregate number of meetings held
during that time period by the respective Committee(s) of which such Director
was a member.
Following the Annual Meeting, subject to the election of the nominees
for Directors, the Corporate Governance Committee of the Board will consist of
Messrs. Elson (Chairman), Philip E. Beekman, David J. Pecker
4
and Faith Whittlesey. The Corporate Governance Committee will be responsible for
all governance matters, succession of senior management, nomination of
individuals for election to the Board and compensation of non-employee
Directors.
EXECUTIVE OFFICERS
The following table sets forth certain information as of April 13, 2000
concerning the executive officers of the Company. All executive officers serve
at the pleasure of the Board of Directors.
NAME AGE POSITION
---- --- --------
Jerry W. Levin 56 Chairman, Chief Executive Officer and President
Paul E. Shapiro 59 Executive Vice President and Chief
Administrative Officer
Bobby G. Jenkins 38 Executive Vice President and Chief
Financial Officer
Ronald H. Dunbar 63 Senior Vice President - Human Resources
Steven R. Isko 36 Senior Vice President and General Counsel
Barbara L. Allen 44 Corporate Secretary
Paul E. Shapiro joined Sunbeam as Executive Vice President and Chief
Administrative Officer in June 1998. Mr. Shapiro was appointed Executive Vice
President and Chief Administrative Officer and a Director of Coleman in June
1998. Mr. Shapiro previously held the position of Executive Vice President and
General Counsel of Coleman from July 1997 until its acquisition by Sunbeam in
March 1998. Before joining Coleman, he was Executive Vice President, General
Counsel and Chief Administrative Officer of Marvel Entertainment Group, Inc.
("Marvel"). Marvel and several of its subsidiaries filed voluntary petitions for
reorganization under Chapter 11 of the United States Bankruptcy Code in 1996.
Mr. Shapiro served as an executive officer of Marvel at the time of such filing.
He had previously spent over 25 years in private law practice and as a business
executive, most recently as a stockholder in the law firm of Greenberg, Traurig,
Hoffman, Lipoff, Rosen & Quentel. Mr. Shapiro is also a member of the Board of
Directors of Toll Brothers, Inc. For a description of certain arrangements
entered into by Sunbeam and MacAndrews & Forbes relating to the services of Mr.
Shapiro as an officer of Sunbeam, see "Certain Relationships and Related
Transactions-Services Provided by MacAndrews & Forbes."
Bobby G. Jenkins joined Sunbeam as Executive Vice President and Chief
Financial Officer in June 1998. Mr. Jenkins was appointed Executive Vice
President of Coleman in August 1998, and previously held the position of Chief
Financial Officer of Coleman's Outdoor Recreation division from September 1997
to May 1998. Mr. Jenkins was Executive Vice President and Chief Financial
Officer of Marvel from December 1993 through June 1997. Mr. Jenkins served as an
executive officer of Marvel at the time of the 1996 Chapter 11 filings of Marvel
and several of its subsidiaries. Mr. Jenkins was Assistant Vice President of
Finance at Turner Broadcasting System from August 1992 to November 1993. Prior
to that, Mr. Jenkins was with Pricewaterhouse LLP, last serving as Senior Audit
Manager. For a description of certain arrangements entered into by Sunbeam and
MacAndrews & Forbes relating to the services of Mr. Jenkins as an officer of
Sunbeam, see "Certain Relationships and Related Transactions-Services Provided
by MacAndrews & Forbes."
Ronald H. Dunbar was appointed Senior Vice President, Human Resources
in August 1998. Mr. Dunbar was Senior Vice President, Human Resources of Revlon
from 1991 until 1998. Mr. Dunbar was Vice President and General Manager of
Arnold Menn and Associates, a career management consulting and executive
outplacement firm, from 1989 to 1991, and Executive Vice President and Chief
Human Resources Officer of Ryder System, Inc., a highway transportation firm,
from 1978 to 1989. Prior to that, Mr. Dunbar served in senior executive human
resources positions at Xerox Corporation and Ford Motor Company.
Steven R. Isko joined Sunbeam in June 1999 as Senior Vice President and
General Counsel. Mr. Isko also serves as Senior Vice President and General
Counsel of Coleman. From May 1998 to December 1998, Mr. Isko was Senior Vice
President, General Counsel and Secretary of The Cosmetic Center, Inc. From June
1997 to April 1998, Mr. Isko was Vice President, Legal for Coleman and from June
1996 to July 1997, was Vice President-Law and Corporate Secretary of Marvel.
Prior to June 1996, Mr. Isko was an associate at the law firm of Skadden, Arps,
Slate, Meagher & Flom LLP in New York, New York.
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Barbara L. Allen joined Sunbeam in June 1999 as Secretary. Ms. Allen
also serves as Secretary of Coleman. From April 1998 to June 1999, Ms. Allen was
a consultant to Coleman. From April 1997 to March 1998, Ms. Allen was Secretary
of Coleman. Prior to April 1997, Ms. Allen served in various capacities at
Coleman, including as Assistant Secretary from December 1991 to April 1997.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth for the years ended December 31, 1999,
December 31, 1998, and December 28, 1997, the compensation for services rendered
to the Company in all capacities of those persons who, during 1999, (i) served
as chief executive officer ("CEO") of the Company, and (ii) were among the four
most highly compensated executive officers of the Company, other than the CEO,
as of the Company's fiscal year end, (the individuals referred to in clauses (i)
and (ii) being collectively referred to as the "Named Executives"). Each of the
Named Executives joined the Company during 1998.
LONG TERM
ANNUAL COMPENSATION AWARDS COMPENSATION AWARDS
-------------------------------------------- ----------------------------
SECURITIES
UNDERLYING
NAME AND OTHER ANNUAL RESTRICTED OPTIONS/SARS ALL OTHER
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION STOCK AWARD COMPENSATION
- ------------------ ---- ---------- ------------- ------------ ---------- ------------ ------------
Jerry W. Levin 1999 $1,112,500 $1,500,000 (1) $ 88,231 (2) 0 250,000 $ 780 (3)
Chairman, Chief 1998 541,667 541,667 123,952 (2) 0 2,750,000 980 (3)
Executive Officer
and President
Paul E. Shapiro 1999 712,500 584,100 -- (4) 0 0 5,084 (5)
Executive Vice 1998 327,273 243,750 -- (4) 0 600,000 588 (3)
President and Chief
Administrative
Officer
Bobby G. Jenkins 1999 410,000 325,000 (1) -- (4) 0 100,000 5,042 (6)
Executive Vice 1998 238,986 (7) 239,102 (8) 55,540 (9) 0 450,000 19,120 (10)
President and
Chief Financial
Officer
Jack D. Hall 1999 400,000 266,600 -- (4) 0 0 5,024 (11)
Former President, 1998 100,000 60,000 54,933 (13) 0 400,000 60 (3)
International(12)
Ronald H. Dunbar 1999 445,000 243,200 -- (4) 0 275,000 5,084 (4)
Senior Vice President, 1998 148,333 74,167 54,574 (14) 0 150,000 89 (3)
Human Resources
- ------------
(1) Bonus earned in 1999 includes discretionary awards of $284,000 and $56,100
for Messrs. Levin and Jenkins, respectively.
(2) For 1999, includes $44,822 for personal use of aircraft, the value of a
Company provided automobile, relocation expenses of $25,511, reimbursement
of country club fees and taxes paid by the Company on the value of such
automobile. For 1998, includes $82,616 for reimbursement of country club
fees, the value of a Company-provided automobile, relocation expenses of
$37,560 and taxes paid by the Company on the value of such relocation
expenses.
(3) Represents Company-paid premiums for term life insurance.
(4) Amounts do not equal the lesser of (i) $50,000 and (ii) 10% of
compensation.
(5) Includes $4,304 for the Company's 401(k) matching contribution and $780 for
Company-paid premiums for term life insurance.
(6) Includes $4,304 for the Company's 401(k) matching contribution and $738 for
Company-paid premiums for term life insurance.
(7) Includes Mr. Jenkins' salary from Coleman from the date of the acquisition
by Sunbeam in March 1998 of 79% of the outstanding stock of Coleman until
his termination of employment with Coleman, Mr. Jenkins'
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salary from Sunbeam from the date of employment by Sunbeam and $12,327 for
accrued vacation in 1998 upon Mr. Jenkins' termination of employment with
Coleman.
(8) Includes the entire amount of bonuses paid to Mr. Jenkins in 1999 for
services rendered to Coleman and to Sunbeam during 1998.
(9) Includes a car allowance, reimbursement of relocation expenses of $37,692
and taxes paid by the Company on such relocation expenses.
(10) Includes severance payments of $18,633 made to Mr. Jenkins in connection
with the termination of his employment with Coleman, and $487 for the
Company's 401(k) matching contribution.
(11) Includes $4,304 for the Company's 401(k) matching contribution and $720 for
Company-paid premiums for term life insurance.
(12) Mr. Hall resigned as President, International in April 2000.
(13) Includes $44,094 for relocation expenses, $9,173 for taxes paid by the
Company on such relocation expenses and the value of a Company-provided
automobile.
(14) Includes $43,863 for relocation expenses, taxes paid by the Company on such
relocation expenses, and the value of a Company-provided automobile.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information with respect to the options
to purchase shares of Common Stock granted to the Named Executives during 1999.
% OF TOTAL
NUMBER OF OPTIONS
SECURITIES GRANTED TO
UNDERLYING EMPLOYEES EXERCISE OR
OPTIONS IN FISCAL BASE PRICE EXPIRATION GRANT DATE
NAME GRANTED (1) YEAR ($/SHARE) DATE (3) VALUE (4)
- ---- ----------- ----------- ----------- ---------- ----------
Jerry W. Levin............... 250,000 (2) 4.1% $ 5.56 4/1/2009 $ 806,462
Bobby G. Jenkins............ 100,000 (2) 1.6% 5.56 4/1/2009 322,597
Ronald H. Dunbar........... 150,000 (2) 2.5% 6.68 2/4/2009 581,370
125,000 (2) 2.1% 4.38 12/15/2009 317,663
- ------------
(1) All options have a term of ten years from their respective grant dates.
(2) These options become exercisable over a period of three years in equal
annual increments commencing on the first anniversary of the grant date.
(3) Grant dates were April 1, 1999 for Messrs. Levin and Jenkins and February 4,
1999 and December 15, 1999 for Mr. Dunbar.
(4) Grant date values were calculated using the Black-Scholes options pricing
model which has been adjusted to take dividends into account for the period
prior to announced discontinuance of dividends. Use of this model should not
be viewed in any way as a forecast of the future performance of the Common
Stock. The estimated present value of each stock option as set forth above
is based on the following inputs:
GRANT DATES
------------------------------
2/04/99 4/1/99 12/15/99
---------- --------- ---------
Risk Free Interest Rate............... 4.87% 5.31% 6.29%
Stock Price Volatility................ 56.32% 55.58% 55.98%
Dividend Yield........................ 0.00% 0.00% 0.00%
8
The model assumes: (a) an expected option term of five years; (b) a
risk-free interest rate based on closing five-year U.S. Treasury Strip
yield on the date of valuation; and (c) no forfeitures. Stock price
volatility is calculated using weekly stock prices for a period of five
years ended as of December 31, 1999. Notwithstanding the fact that these
options are, with limited exceptions, non-transferable, no discount for
lack of marketability was taken.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION VALUES
The following table sets forth information with respect to option
exercises by the Named Executives during 1999 and the number of options held by
the Named Executives at the Company's fiscal year end.
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS HELD AT IN-THE-MONEY OPTIONS AT
DECEMBER 31, 1999 DECEMBER 31, 1999 (1)
SHARES ACQUIRED VALUE --------------------------- ----------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ---- --------------- -------- ----------- ------------- ----------- --------------
Jerry W. Levin............... 0 0 0 3,000,000 0 0
Paul E. Shapiro.............. 0 0 0 600,000 0 0
Bobby G. Jenkins............. 0 0 0 550,000 0 0
Jack D. Hall (2)............. 0 0 0 400,000 0 0
Ronald H. Dunbar............. 0 0 50,000 375,000 0 0
- ------------
(1) The closing price of the Common Stock on December 31, 1999 was $4.20 per
share.
(2) Mr. Hall resigned as President, International in April 2000.
DEFINED BENEFIT OR ACTUARIAL PLAN DISCLOSURE
Messrs. Levin, Shapiro and Jenkins participate in the New Coleman
Company, Inc. Retirement Plan for Salaried Employees (the "Coleman Retirement
Plan"), a noncontributory qualified defined benefit retirement plan. Effective
January 1, 1999, the Coleman Retirement Plan adopted a "cash balance" benefit
formula. Under this formula, the benefit that Messrs. Levin and Shapiro earn on
and after that date is based on both (i) an annual "pay credit" (which is fixed
percentage, determined by reference to a table, of that year's compensation not
in excess of the maximum compensation limits established by the Internal Revenue
Code of 1986, as amended (the "Code")) and (ii) an annual "interest credit" on
their previously earned benefits. (The annual pay credit percentage increases
with age. The annual interest credit is based on the interest rate on 30-year
Treasury securities, subject to a floor and a ceiling rate.) Under the cash
balance formula, Mr. Jenkins receives only annual "interest credits" on the
benefit which he earned as of December 31, 1998. The annual pension from the
Coleman Retirement Plan will be reduced by any pension amounts payable by other
plans in which Messrs. Levin, Shapiro and Jenkins may have participated while
employed by a company that was in the same "controlled group" of companies as
Coleman. Their projected annual benefits under the Coleman Retirement Plan,
payable in a single life annuity form at age 65, would be:
NAME ANNUITY AMOUNT
---- --------------
Mr. Levin $19,154.64
Mr. Shapiro $13,295.04
Mr. Jenkins $5,584.68
Mr. Dunbar is entitled to a supplemental retirement benefit pursuant to his
employment agreement. See "Employment Contracts and Termination of Employment
and Change In Control Arrangements--Employment Arrangements with Mr. Ronald H.
Dunbar."
9
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth information as of April 15, 2000 with
respect to beneficial ownership of the Common Stock by all persons known by the
Company to be the record or beneficial owner of more than 5% of the outstanding
shares of Common Stock. Except as otherwise noted, all beneficial owners listed
below have sole voting and investment power with respect to the shares of Common
Stock owned by them.
AMOUNT AND NATURE PERCENTAGE OF
NAME OF BENEFICIAL OWNERSHIP COMMON STOCK
- ---- ----------------------- ------------
Ronald O. Perelman ............................... 37,099,749 (1) 28.4% (1)
Franklin Mutual Advisers, Inc. ................... 17,541,398 (2) 16.3%
Albert J. Dunlap ................................. 7,741,564 (3) 6.8% (3)
Invista Capital Management, LLC/Principal Mutual
Holding Company .................................. 7,392,900 (4) 6.9%
- ------------
(1) Represents shares of Common Stock received by Coleman (Parent) Holdings,
Inc., an affiliate of MacAndrews & Forbes ("Parent Holdings"), in the
Company's acquisition of 79% of the outstanding stock of Coleman and 23
million shares of Common Stock that may be acquired by a subsidiary of
MacAndrews & Forbes pursuant to a warrant issued to it by Sunbeam. The
shares of Common Stock subject to the warrant have a $7 per share exercise
price, which exceeds the current market price of the Common Stock. The
address of Parent Holdings is 35 E. 62nd Street, New York, New York 10021.
Ronald O. Perelman is the indirect beneficial owner of all of the
outstanding capital stock of Parent Holdings. Accordingly, Mr. Perelman may
be deemed to be the beneficial owner of all of the shares of Common Stock
owned by Parent Holdings. Mr. Perelman's address is 35 E. 62nd Street, New
York, New York 10021.
(2) Information reflected in this table and the notes thereto with respect to
Franklin Mutual Advisers, Inc. ("FMA") is derived from the Schedule 13D,
dated November 1, 1996, filed by FMA or its predecessors with the
Securities and Exchange Commission (the "SEC"), as thereafter amended, most
recently on March 1, 1999. The address of FMA is 51 John F. Kennedy
Parkway, Short Hills, New Jersey 07078. The shares listed above are
beneficially owned by one or more open-end investment companies or other
managed accounts which, pursuant to advisory contracts, are advised by FMA.
FMA disclaims beneficial ownership of these shares.
(3) Information reflected in this table and the notes thereto with respect to
Mr. Dunlap (the former Chairman and Chief Executive Officer of the Company)
is based upon filings made by him with the SEC. Mr. Dunlap's holdings
include certain purported stock grants for 1,166,667 shares and options to
acquire an additional 6,250,000 shares of Common Stock granted by the
Company which are a matter of dispute between the Company and Mr. Dunlap.
Nothing contained in this Proxy Statement should be construed to limit or
otherwise affect the Company's claims against Mr. Dunlap, including claims
with respect to his entitlement to certain equity grants.
(4) Information reflected in this table and the notes thereto with respect to
Invista Capital Management, LLC ("Invista") and Principal Mutual Holding
Company ("Principal") is derived from the Form 13G jointly filed with the
SEC by Invista and Principal on February 15, 2000. The address of Invista
is 1900 Hub Tower, 699 Walnut Street, Des Moines, Iowa 50309. The address
of Principal is 711 High Street, Des Moines, Iowa 50392. Invista and
Principal exercise shared voting power and investment discretion with
respect to all of the shares of Common Stock beneficially owned by them.
10
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the beneficial ownership, reported to the
Company as of April 15, 2000, of Common Stock, including shares as to which a
right to acquire ownership exists, of: (1) each Director and nominee for
election as Director of the Company; (2) each of the Named Executives, and (3)
the Directors, nominees for Director and current executive officers of the
Company as a group.
AMOUNT AND NATURE
OF BENEFICIAL PERCENTAGE OF
NAME OWNERSHIP(1) COMMON STOCK
- ---- ----------------- -------------
DIRECTORS AND DIRECTOR NOMINEES
Philip E. Beekman...................... 6,500 (2) *
Charles M. Elson....................... 12,000 (2) *
Howard Gittis.......................... 0 (3) *
John H. Klein.......................... 1,915 (2) *
Jerry W. Levin......................... 83,333 (3)(4) *
David J. Pecker........................ 0 *
James D. Robinson III.................. 25,000 *
Faith Whittlesey....................... 8,390 (2) *
Howard Kristol......................... 12,000 (2) *
Peter Langerman........................ 0 (5) *
NAMED EXECUTIVES
Paul E. Shapiro........................ 0 (3) *
Bobby G. Jenkins....................... 33,333 (6) *
Jack D. Hall(7)........................ 0 *
Ronald H. Dunbar....................... 100,000 (8) *
All Directors, nominees for Directors,
and current executive officers
as a group (14 persons)................ 283,815 (9) *
- ------------
* Less than one percent.
(1) All of the above named individuals have the sole power to vote and to
dispose of the shares of Common Stock listed above except that 5,000 of the
shares beneficially owned by Mr. Beekman are held by the Beekman Family
Limited Partnership, of which he is a General Partner.
(2) Includes restricted shares of Common Stock granted to each of Directors
Beekman, Elson, Klein, Kristol and Whittlesey upon their respective
elections, appointments and subsequent reelections to the Sunbeam Board of
Directors, all of which shares were immediately vested.
(3) Does not include shares of Common Stock owned by MacAndrews & Forbes as to
which Messrs. Gittis, Levin and Shapiro disclaim beneficial ownership. See
"Security Ownership Of Certain Beneficial Owners."
(4) Mr. Levin has the right to acquire all of such shares under options which
are currently exercisable; no other options become exercisable within sixty
days after April 15, 2000.
(5) Does not include shares of Sunbeam Common Stock owned by Franklin Mutual
Advisers, as to which Mr. Langerman disclaims beneficial ownership. See
"Security Ownership Of Certain Beneficial Owners."
(6) Mr. Jenkins has the right to acquire all of such shares under options which
are currently exercisable; no other options become exercisable within sixty
days after April 15, 2000.
(7) Mr. Hall resigned as President, International in April 2000.
(8) Mr. Dunbar has the right to acquire all of such shares under options which
are currently exercisable; no other options become exercisable within sixty
days after April 15, 2000.
11
(9) Includes 216,666 shares of Common Stock which all current executive
officers of the Company have the right to acquire under options which are
currently exercisable; no other options held by current executive officers
become exercisable within sixty days after April 15, 2000.
EMPLOYMENT CONTRACTS AND TERMINATION OF
EMPLOYMENT AND CHANGE IN CONTROL ARRANGEMENTS
EMPLOYMENT AGREEMENTS WITH MESSRS. LEVIN, SHAPIRO AND JENKINS
Effective January 3, 2000, the Company entered into new employment
agreements with (i) Mr. Levin (the "Levin Agreement"), (ii) Mr. Shapiro (the
"Shapiro Agreement"), and (iii) Mr. Jenkins (the "Jenkins Agreement" and
collectively with the Levin Agreement and the Shapiro Agreement, the "Employment
Agreements"). The Employment Agreements increased the compensation payable to
each of the three executives and extended the term of their existing employment
agreements with the Company. Pursuant to their respective Employment Agreements,
the Company agreed to employ Mr. Levin as Chairman and Chief Executive Officer,
Mr. Shapiro as Executive Vice President and Chief Administrative Officer, and
Mr. Jenkins as Executive Vice President and Chief Financial Officer. The term of
each of the Employment Agreements expires June 30, 2003. Messrs. Levin, Shapiro
and Jenkins are sometimes referred to herein as the "Executives".
COMPENSATION
Under the Levin Agreement, Mr. Levin is to be paid base salary at an
annual rate of $1,150,000, increasing to (i) $1,300,000 effective July 1, 2000,
(ii) $1,450,000 effective July 1, 2001 and (iii) $1,600,000 effective July 1,
2002. Under the Shapiro Agreement, Mr. Shapiro is to be paid a base salary at an
annual rate of $750,000, increasing to (i) $850,000 effective July 1, 2000, (ii)
$950,000 effective July 1, 2001 and (iii) $1,050,000 effective July 1, 2002.
Under the Jenkins Agreement, Mr. Jenkins is to be paid a base salary at an
annual rate of $425,000, increasing to (i) $475,000 effective July 1, 2000, (ii)
$525,000 effective July 1, 2001 and (iii) $575,000 effective July 1, 2002.
Pursuant to their respective Employment Agreements, Messrs. Levin, Shapiro and
Jenkins are entitled to a performance-based target annual bonus of 125% of
annual base salary, 75% of annual base salary, and 60% of annual base salary,
respectively, and if certain performance objectives are met, each Executive may
be paid a performance-based annual bonus of up to two times their respective
target amounts. Pursuant to the Levin Agreement, Mr. Levin will receive a
re-signing bonus of $500,000 payable on each of July 1, 2000, 2001 and 2002.
Pursuant to the Shapiro Agreement, Mr. Shapiro will receive a re-signing bonus
of $250,000 payable on each of July 1, 2000, 2001 and 2002. Each of the
Executives also participates in other benefit plans generally available to other
employees and senior executives of the Company. Each of the Executives also
receives such perquisites as a company car or car allowance, one country club
membership, reimbursement of financial, tax and estate planning fees, first
class air travel, residential security system, and, only in the case of Mr.
Levin, private aircraft travel for travel in North America.
EQUITY GRANTS
Pursuant to the Employment Agreements and subject to stockholder
approval, Messrs. Levin, Shapiro and Jenkins received grants of stock options on
January 3, 2000 to purchase 3,000,000, 600,000 and 550,000 shares of Common
Stock, respectively, at $4.125 per share. The options will vest in full on June
30, 2003 or upon the occurrence of a change of control of the Company or certain
other events. See "Approval of Stock Option Grants to Jerry W. Levin," "Approval
of Stock Option Grants to Paul E. Shapiro" and "Approval of Stock Option Grants
to Bobby Jenkins".
TERMINATION AND CHANGE IN CONTROL PROVISIONS
The Company may terminate an Executive's employment under the
Employment Agreement for Cause. "Cause" means: (i) willful gross neglect of or
willful gross misconduct in carrying out the duties under the Agreement,
resulting in either case, in material economic harm to the Company, or (ii) the
conviction of a felony or of any crime involving moral turpitude. If the Company
terminates an Executive's employment for Cause, or an Executive voluntarily
resigns, the Executive will be entitled to receive (i) base salary through the
date of termination, and (ii) all outstanding options not then exercisable shall
be forfeited and exercisable options will remain exercisable until the earlier
of the 90th day after the date of termination or the originally scheduled
expiration date of the options.
12
The Company may terminate an Executive's employment for disability
continuing for more than six months. As defined in each Employment Agreement,
disability generally means the Executive's inability, due to physical or mental
incapacity, to substantially perform his duties and responsibilities under the
Employment Agreement as determined by a medical doctor. The Employment
Agreements provide that if the Company terminates an Executive's employment for
disability, the Executive is entitled to receive (i) disability benefits in
accordance with the long term disability program for senior executives, provided
that in no event may such benefits provide the Executive with less than 60% of
his then current base salary to age 65, (ii) base salary through the end of the
month in which disability benefits begin, (iii) a lump sum payment equal to 60%
of all re-signing bonus amounts, if any, not previously paid (in the case of
Messrs. Levin and Shapiro), (iv) a pro-rata annual incentive award for the year
in which termination due to disability occurs, based on target bonus for the
year of termination, payable when bonuses are paid to other officers, (v) full
vesting and exercisability of all outstanding options which will remain
exercisable through the end of their originally scheduled terms, and (vi)
continued participation in all medical, dental, vision and hospitalization
insurance coverage and in all other employee benefit plans or programs in which
the Executive was participating on the date of the termination of his employment
for a period of 24 months following termination of employment. If the Company's
benefit plans do not permit continuation of an Executive's participation in the
benefit plans following his termination, the Company is required to provide the
Executive with an amount which is sufficient for him to purchase equivalent
benefits.
If an Executive's employment is terminated by the Company without
Cause, or if there is a Constructive Termination without Cause or the Company
gives notice of non-renewal, the Executive will be entitled to receive (i) base
salary through the termination date, (ii) all re-signing bonus amounts not
previously paid (in the case of Messrs. Levin and Shapiro), (iii) pro-rata
annual incentive award based upon target bonus for the year of termination, (iv)
a lump sum payment in an amount equal to the greater of (A) base salary for the
remainder of his employment term without regard to earlier termination thereof,
or (B) two times his base salary (based on the average base salary for the
remaining period under the Employment Agreement), (v) a lump-sum payment equal
to the greater of (i) annual incentive awards for the remainder of his
employment term without regard to earlier termination thereof, or (ii) two times
his annual incentive award, based on target bonus for the year of termination.
In addition to the above payment, all outstanding options will become fully
vested and will remain exercisable through the end of their originally scheduled
term. The Executive will be entitled to continued participation for the
Executive and his family in all medical, dental, vision and hospitalization
insurance coverage on the date of the termination of employment until age 65 (in
the case of Messrs. Levin and Shapiro); and in the case of Mr. Jenkins, for a
period equal to the greater of (A) the remainder of the term or (B) 24 months
following termination of employment. The Executive will also be entitled to
participate in other employee benefit plans or programs in which the Executive
was participating for a period equal to the greater of (A) the remainder of the
term or (B) 24 months following termination of employment except that if an
Executive becomes re-employed with another employer and is eligible to receive
medical or other welfare benefits under another employer-provided plan, the
medical and other welfare benefits described above will be secondary to those
provided under such other plan during such applicable period of eligibility.
Constructive Termination without Cause means termination by the
Executive of his employment at his initiative within 30 days following the
occurrence of any of the following events without his consent: (i) a reduction
in the Executive's then current Base Salary or target bonus opportunity as a
percentage of Base Salary; (ii) the taking of any other action by the Company
that would diminish the incentive opportunities of the Executive as provided in
his respective Employment Agreement, (iii) the taking of any action by the
Company that would significantly diminish the aggregate value of the benefits
provided to the Executive under the Company's medical, health, accident,
disability, life insurance, thrift and retirement plans; (iv) the removal of the
Executive from any of the positions described in his respective Employment
Agreement, (v) the failure of the Company's stockholders to approve either the
Incentive Plan Amendment or such Executive's option grant (as set forth in
Proposal Nos. 6 and 2, 3, or 4, respectively); (vi) a material diminution in the
Executive's duties; (vii) a change in the reporting structure so that the
Executive reports to someone other than as provided in his respective Employment
Agreement; (viii) relocation of the Executive's principal place of employment to
a location other than Palm Beach County, or North Broward County, Florida or New
York City; (ix) a material breach by the Company of any provision of the
Employment Agreement; (x) any purported termination of the Executive's
employment that is not effected due to disability, for Cause or the provisions
of Termination without Cause; (xi) the failure of the Company to obtain the
assumption in writing of its obligation to perform the Employment Agreement by
any successor to all or substantially all of the assets of the Company within 15
days after a merger, consolidation, sale or similar transaction, except that, in
the event of a Change of Control (as defined in an Executive's Employment
Agreement),
13
the Executive will be entitled to given notice of a Constructive Termination
even if a successor has assumed the Employment Agreement, or (xii) the
occurrence of a Change in Control.
If an Executive's employment terminates due to his death, his estate or
beneficiaries will be entitled to (i) a lump-sum payment equal to 60% of base
salary that would be payable for a period which is the greater of (A) 12 months
or (B) the remaining term of the Employment Agreement without regard to earlier
termination thereof, (ii) a lump sum payment equal to 60% of all re-signing
bonuses not previously paid (in the case of Messrs. Levin and Shapiro), (iii) a
pro-rata annual incentive award for the year in which the death occurs based on
target bonus for the year of termination, and payable when bonuses are paid to
other officers, and (iv) full vesting of all outstanding options which will
remain exercisable through the end of their originally scheduled terms.
In the event of a Change of Control, all amounts, entitlements or
benefits in which an Executive is not yet vested shall become fully vested
including, without limitation, all outstanding options which will remain
exercisable through the end of their regularly scheduled terms.
Pursuant to their respective Employment Agreements, in the event that
any payment pursuant to an Employment Agreement is subject to excise taxes
pursuant to section 4999 of the Code, then such Executive will be paid an
additional amount equal to such excise taxes.
Pursuant to their previous employment agreements with the Company, and
subject to stockholder approval at the Annual Meeting, Messrs. Levin, Shapiro
and Jenkins were granted options to purchase 2,750,000, 600,000 and 400,000
shares of Common Stock, respectively. These options will vest and be exercisable
on June 30, 2001 or upon, among other things, a change of control.
EMPLOYMENT AGREEMENT WITH MR. JACK D. HALL
The Company had entered into an employment agreement with Mr. Jack Hall
on October 1, 1998 (the "Hall Agreement"). The term of the Hall Agreement
expired October 1, 2000. Mr. Hall resigned as President, International in April
2000. Under the Hall Agreement, Mr. Hall was to be paid a base salary at an
annual rate not less than $400,000. Additionally, under the Hall Agreement, Mr.
Hall was eligible to receive a performance-based annual target bonus equal to
60% of his annual base salary. Mr. Hall also participated in the other benefit
plans available generally to employees or other senior executives of Sunbeam.
The Hall Agreement provided for severance payments for certain terminations of
the Hall Agreement.
The Company is in discussions regarding severance to be paid to Mr.
Hall, although no agreement has been reached as of April 30, 2000.
EMPLOYMENT ARRANGEMENTS WITH MR. RONALD H. DUNBAR
The Company and Ronald H. Dunbar have entered into an Agreement dated
January 29, 1999 (the "Dunbar Agreement"). Mr. Dunbar is the Company's Senior
Vice President, Human Resources.
Under the Dunbar Agreement, Mr. Dunbar is entitled to a supplemental
retirement benefit if (i) Mr. Dunbar remains employed by Sunbeam until at least
age 65, (ii) Mr. Dunbar dies prior to age 65 while still employed by Sunbeam, or
(iii) Mr. Dunbar is terminated by Sunbeam prior to age 65 other than for cause.
The supplemental benefits are not payable unless Mr. Dunbar elects not to
receive benefits under certain retirement plans of Revlon Consumer Products
Corporation ("RCPC") (the "Revlon Retirement Plans") until after Mr. Dunbar's
employment with Sunbeam ends. If Mr. Dunbar remains employed by Sunbeam until
age 65 or dies prior to age 65 while still employed by Sunbeam, Mr. Dunbar will
be entitled to a supplemental retirement benefit equal to the amount Mr. Dunbar
(or his beneficiary) would have received under the Revlon Retirement Plans had
Mr. Dunbar remained with RCPC in "credited service" under the Revlon Retirement
Plans, less in each case, the amount Mr. Dunbar (or his beneficiary) is entitled
to under the Revlon Retirement Plans and certain retirement benefits from
Sunbeam. If Mr. Dunbar's employment is terminated other than for cause prior to
age 65, Mr. Dunbar will be entitled to a supplemental retirement benefit equal
to the amount Mr. Dunbar (or his beneficiary) would have received under the
Revlon Retirement Plans had Mr. Dunbar remained with RCPC in "credited service"
under the Revlon Retirement Plans until the earlier of (i) Mr. Dunbar's death,
(ii) Mr. Dunbar reaching age 65 and (iii) the date Mr. Dunbar begins to receive
benefits under the Revlon Retirement Plans, less in each case, the amount Mr.
Dunbar (or his beneficiary) is entitled to receive under the Revlon Retirement
Plans and certain retirement benefits from Sunbeam.
14
Pursuant to the Dunbar Agreement, Mr. Dunbar is also entitled to
severance payments in the event of Mr. Dunbar's termination, other than for
cause prior to age 65, equal to the amount Mr. Dunbar would have been entitled
to under the Revlon Executive Severance Policy, reduced by the amount of
severance benefits Mr. Dunbar is entitled to receive under any severance
policies or programs which Sunbeam then has in effect. If Mr. Dunbar's
employment is terminated for any reason after age 65, Mr. Dunbar will only be
entitled to those severance benefits, if any, provided under severance policies
and programs which Sunbeam otherwise then has in effect. Furthermore, pursuant
to a memorandum to Mr. Dunbar dated August 18, 1998 offering employment at the
Company, Mr. Dunbar was offered severance equal to one year's base salary plus
target bonus under the Company's Incentive Plan.
SUNBEAM EXECUTIVE SEVERANCE POLICY
Sunbeam's Executive Severance Policy provides that upon termination of
employment of eligible executive employees, other than voluntary resignation or
termination by Sunbeam for good reason, in consideration for the execution of a
release, confidentiality agreement and non-competition agreement, the eligible
executive will be entitled to receive, in lieu of severance under any employment
agreement then in effect, a number of months of severance pay based upon such
executive's grade level and years of service reduced by the amount of any
compensation from subsequent employment, unemployment compensation or statutory
termination payments received by such executive during the severance period, as
well as continued participation in medical and certain other benefit plans for
the severance period (or in lieu thereof, at the election of the Company, upon
commencement of subsequent employment, a lump sum payment equal to the then
present value of 50% of the amount of base salary then remaining payable through
the balance of the severance period). Although Messrs. Levin, Shapiro, Jenkins
and Dunbar are entitled to participate in the Company's Executive Severance
Policy, they each have severance provisions contained in their respective
employment agreements or arrangements (see "Employment Agreements with Messrs.
Levin, Shapiro and Jenkins" and "Employment Arrangements with Mr. Dunbar").
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Compensation Committee of the Board of Directors is responsible for
establishing the general compensation policies of the Company and administering
the Option Plan, the Incentive Plan, and if approved by the Company's
stockholders at the Annual Meeting, the LTIP and the 2000 Option Plan. The
Compensation Committee reviews and/or approves specific compensation levels for
the Company's senior officers and certain corporate management personnel
(collectively, the "executive officers" and, individually, an "executive
officer").
EXECUTIVE OFFICER COMPENSATION
PHILOSOPHY
It is the philosophy of the Company that executive compensation be
directly linked to the interests of the Company's stockholders and therefore to
financial objectives that the Company believes are primary determinants of
long-term stockholder value. The Compensation Committee's objectives in
administering the Company's executive compensation plans are to ensure that pay
levels and incentive compensation are: (i) properly linked to stockholder value,
(ii) competitive in attracting, retaining and motivating the best personnel and
(iii) simple in design and easily understood. The compensation plans for the
Company's executive officers emphasize the importance of the Company's
performance by providing a direct correlation between executive compensation and
stockholder interests. The stock option element of compensation is intended to
encourage ownership and retention of Company stock by all employees, and
especially executive officers.
EXECUTIVE OFFICERS
On June 15, 1998, Sunbeam announced that Jerry W. Levin of MacAndrews &
Forbes and formerly Chief Executive Officer of Coleman, had been elected as
Sunbeam's Chief Executive Officer. On August 12, 1998, the Company announced it
had entered into a settlement agreement with MacAndrews & Forbes and its
affiliates (collectively "Mafco") in connection with the Company's acquisition
of a controlling interest in Coleman under which agreement Mafco released the
Company from certain claims and Sunbeam was able to retain the services of
executive personnel affiliated with Mafco who had been managing Sunbeam since
mid-June of 1998, including Mr. Levin, Mr. Shapiro and Mr. Jenkins. In
connection with this settlement agreement, the Company's Compensation Committee
negotiated the terms of three-year employment agreements between the Company and
each of Messrs.
15
Levin, Shapiro and Jenkins (the "Old Levin Agreement", the "Old Shapiro
Agreement" and the "Old Jenkins Agreement", respectively). Effective January 3,
2000, the Company entered into the Levin Agreement, the Shapiro Agreement and
the Jenkins Agreement, which increased the compensation payable to each of the
three executives and extended the term of each of their employment agreements
through June 30, 2003. See "Employment Agreements with Messrs. Levin, Shapiro
and Jenkins." The terms of the new Employment Agreements were negotiated by the
Compensation Committee, with the advice of an outside consultant, with the goal
of revising the compensation of these three executives to be more competitive
with other comparable companies, although not necessarily the companies in the
Company's self-constructed stockholder return peer group. See "Stockholder
Return Performance Presentation".
Base salaries for the Company's other executives, most of whom were
hired in 1998 and 1999 after the employment of Mr. Levin, were established based
in large part upon their salaries at prior positions. The Company does not
attempt to match compensation for such executives to the compensation levels at
those companies which are included in the Company's self-constructed stockholder
return peer groups. See "Stockholder Return Performance Presentation" for a
description of the Company's stockholder return peer group.
MANAGEMENT INCENTIVE PLAN
The Incentive Plan is designed to motivate the Company's key employees
to increase stockholder wealth through potential cash bonuses based on the
performance of the Company and their personal performance. The Company's
executive officers and managers and other key employees of the Company are
eligible to participate in the Incentive Plan. Under the Incentive Plan,
participants are eligible to receive bonuses based upon the following financial
performance measurements: (i) earnings before interest, tax and amortization as
stated in conformity with Generally Accepted Accounting Principles ("GAAP");
(ii) asset management goals measured by either changes in days' sales of
receivables and days in inventory or operating working capital per sales dollar;
and (iii) sales targets. Each of the performance goals may relate to the results
of the Company, a business unit, product line, territory or any combination
thereof, and may be adjusted in light of any unusual or non-recurring event
affecting the Company or its financial statements. In addition, participants
other than Senior Officers (as defined below) will be required to meet up to
five personal performance objectives. These performance goals will be oriented
toward quantitative objectives, such as cost savings or earnings enhancement.
The Company's Chief Executive Officer and other executive officers that may be
subject to the provisions of Section 162(m) of the Code, (the "Senior
Officers"), will be awarded bonuses based solely on the Company's performance.
The Incentive Plan provides that during each fiscal year, management of
the Company will recommend to the Compensation Committee certain minimum levels
of Company performance, below which no Senior Officer will receive any bonus
under the Incentive Plan. Participants other than the Senior Officers of the
Company may receive cash bonuses based upon their achievement of personal
objectives even if the Company fails to meet these minimum performance
objectives. At the minimum level of Company performance ("threshold
performance"), Incentive Plan participants will be eligible to receive from 5%
to 50% (which will be 62.5% upon approval of Proposal 5 set forth in this Proxy
Statement) of their base salaries. At another, higher level of performance
("target performance"), participants will be entitled to receive from 10% to
100% (which will be 125% upon approval of Proposal 5 set forth in this Proxy
Statement) of their base salaries. At the highest levels of performance
("maximum targets"), participants may be entitled to receive from 20% to 200%
(which will be 250% (subject to a cap of $4,000,000) upon approval of Proposal 5
set forth in this Proxy Statement) of their base salaries.
The Compensation Committee believes that this combination of requiring
minimum objective Company performance levels for all participants, coupled with
individual goals (for participants other than the Senior Officers) which are
quantitative in nature and calculated to increase productivity, reduce costs
and/or otherwise enhance profitability of the Company, assists in assuring that
the Company's compensation system, especially the bonus program, aligns the
interests of the Company's officers and other employees with the interests of
its stockholders.
LONG-TERM INCENTIVE PLAN
The Compensation Committee and the Board of Directors adopted the
Sunbeam Corporation Key Executive Long Term Incentive Plan ("LTIP"), subject to
the approval of the Company's stockholders at the Annual Meeting, in order to
provide long-term incentives to the senior managers of the Company's strategic
business units. Under the LTIP, participants are eligible to receive payments
based upon satisfaction of performance measures over cumulative three-year
performance periods that begin each fiscal year. The performance measurements
include earnings before interest, taxes and amortization, net sales and working
capital.
16
The LTIP provides that during each fiscal year, management of the
Company will recommend to the Compensation Committee certain minimum levels of
performance for executive officers below which no executive officer will receive
any payments under the LTIP. At the minimum level of performance ("threshold
performance") LTIP participants will be eligible to receive 5% to 30% of their
base salaries. At another, higher level of performance ("target performance'),
participants will be entitled to receive from 10% to 60% of their base salaries.
At the highest level of performance ("maximum targets"), participants may be
entitled to receive 20% to 120% of their base salaries. Awards may be paid in
cash and/or Common Stock, at the Company's election.
The Compensation Committee believes that the LTIP, which requires
satisfaction of performance criteria measured over a three-year period, enhances
the ability of the Company's compensation system to align the interests of the
Company's officers and other employees with the interests of its stockholders.
STOCK OPTION PLAN
The Compensation Committee believes that the Company's stock option
program is an important factor in attracting and retaining the high caliber
employees essential to the Company's success and in aligning those individuals'
long term interests with those of the stockholders. As of March 31, 2000,
options to purchase an aggregate of 10,430,967 shares of Common Stock were
outstanding and only 801,567 shares of the 16,300,000 shares originally
authorized under the Option Plan remained available for future grants.
Therefore, the Compensation Committee and the Board of Directors approved the
2000 Option Plan, subject to the approval of the Company's stockholders, which
provides for awards of stock options, stock appreciation rights, restricted
stock, stock bonus and/or performance awards covering up to 8,000,000 shares of
Common Stock.
NON-EMPLOYEE DIRECTORS' COMPENSATION
The Compensation Committee and the Board of Directors approved a
non-employee Directors' compensation program consisting of (i) an annual
retainer of $25,000, (ii) a fee of $1,000 for each Board or Committee meeting
attended by such non-employee Director (whether in person or by telephone),
(iii) a $2,000 annual fee for each Committee Chairmanship and (iv) an annual
grant of a stock option to purchase 5,000 shares of Common Stock to be granted
on the date of election of a non-employee Director and upon each subsequent
reelection having an exercise price of the Fair Market Value (as defined in the
2000 Option Plan) on the date of grant, and vesting at the rate of one-third on
each anniversary of the date of grant. The previous non-employee Directors'
compensation program provided for an annual retainer of $10,000, a fee of $1,000
for each Board or Committee meeting attended by a Director (whether in person or
by telephone), and the grant of 1,500 shares of restricted stock upon his or her
election to the Board of Directors and upon each subsequent reelection to the
Board of Directors (pro-rated in the case of an election or appointment at any
time other than an annual meeting of stockholders) which vested immediately upon
acceptance of his or her election or appointment. The Compensation Committee
determined to increase the compensation payable to non-employee Directors to
make such compensation more competitive with comparable companies and thereby
assist the Company in attracting qualified directors.
COMPLIANCE WITH CERTAIN TAX LAWS
Section 162(m) of the Code limits the deductibility of certain
compensation in excess of $1,000,000 per year paid by a public corporation to
its Senior Officers. However, an exception to the deduction limitations of
Section 162(m) of the Code applies to certain performance-based compensation,
provided that the plan pursuant to which such compensation will be paid has been
approved by stockholders with a separate vote and certain other requirements
have been met. Mr. Levin's annual base salary is $1,150,000 per year under the
Levin Agreement, with additional increases set forth in his Employment
Agreement. Mr. Shapiro's annual base salary is $750,000 under the Shapiro
Agreement, increasing to $1,050,000 effective July 1, 2002. While the base
compensation of Messrs. Levin and Shapiro exceeds the limitations of Section
162(m) of the Code, the Compensation Committee believes that such compensation
is appropriate in order to provide Messrs. Levin and Shapiro with compensation
competitive with the compensation paid by other comparable companies. See
"Employment Agreements with Messrs. Levin, Shapiro and Jenkins." The Company's
stockholders approved the Incentive Plan at the Company's 1999 annual meeting,
therefore, payments will be performance-based compensation pursuant to Section
162(m) of the Code. Subject to the approval of the Company's stockholders at the
Annual Meeting, payments under the LTIP and the grants of options to Messrs.
Levin, Shapiro and Jenkins and grants of options and other awards under the
Option Plan and the 2000 Option Plan are also expected to qualify as
performance-based compensation pursuant to Section 162(m).
17
COMPENSATION OF CHIEF EXECUTIVE OFFICER
In order to continue to retain the services of Mr. Levin, which the
Compensation Committee considered essential in order to ensure efficient
management of the Company's business and the successful execution of the
Company's strategy of maximizing stockholder value, the Company entered into the
Levin Agreement with Mr. Levin. (See "Employment Agreements with Messrs. Levin,
Shapiro and Jenkins".)
In setting Mr. Levin's compensation under the Levin Agreement, the
Compensation Committee considered factors such as individual and corporate
performance (without reference to any specific performance-related targets) and
individual experience and expertise. In addition, the Compensation Committee
considered Mr. Levin's overall compensation relative to compensation levels of
Chief Executives of other comparable companies. No particular weight was given
by the Compensation Committee to any of the foregoing factors.
Prior to the effectiveness of the Levin Agreement, Mr. Levin's
compensation was governed by the Old Levin Agreement. See "--Philosophy" and
"--Executive Officers". Pursuant to the Old Levin Agreement, Mr. Levin's base
salary was at least $1,000,000 per year for each year of his employment
agreement. In addition, pursuant to the Old Levin Agreement, Mr. Levin was
granted 2,750,000 stock options at exercise prices ranging from $7 per share to
$14 per share. In order to provide Mr. Levin with compensation that was more
competitive with other comparable companies, as of April 1, 1999, the
Compensation Committee approved an increase in Mr. Levin's base salary to
$1,150,000 and granted Mr. Levin stock options pursuant to the Option Plan to
purchase 250,000 shares of Common Stock at an exercise price of $5.56 per share,
which was the Fair Market Value per share (as defined in the Option Plan) on the
date of grant. Such stock option grant vests at the rate of one-third on the
first, second and third anniversary of the date of grant. Mr. Levin was paid a
bonus of $1,216,000 for the 1999 fiscal year under the Incentive Plan. The
Compensation Committee also approved a discretionary bonus of $284,000 to
recognize the substantial success of Mr. Levin during 1999 in non-financial
areas of the Company.
The foregoing report is furnished by the Compensation Committee of the
Board of Directors.
COMPENSATION COMMITTEE
Howard Gittis, Chairman
John H. Klein
Faith Whittlesey
(CURRENT MEMBERS)
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Members of Sunbeam's Compensation Committee during fiscal year 1999
were Howard Gittis, Chairman, John Klein, and Faith Whittlesey, none of whom
presently do, or previously did, serve as an officer of Sunbeam or any of its
subsidiaries. Mr. Gittis is an executive officer of MacAndrews & Forbes (see
"Certain Relationships and Related Transactions").
REPORT OF THE AUDIT COMMITTEE
The Audit Committee consists of four directors, none of whom are
officers or employees of the Company. During 1999, the Audit Committee met eight
times and took action by written consent one time. In general, the Audit
Committee's responsibility is to assist the Board of Directors in monitoring the
quality and integrity of the financial reporting of the Company, the corporate
accounting and reporting procedures of the Company and the independence and
performance of the Company's internal and outside independent auditors. In
February 2000, the Audit Committee adopted a charter, which was approved by the
Board of Directors. A copy of the charter is attached to this Proxy Statement as
Appendix A.
In the course of its meetings with management and Deloitte & Touche LLP
(the Company's independent auditors), the Audit Committee has reviewed and
discussed the Company's audited financial statements with management and
Deloitte & Touche LLP. The Audit Committee also meets with the Company's
internal auditors to review their activities. The Audit Committee discussed with
the internal auditors and the independent public accountants the overall scope
and specific plan for their respective audits. The Audit Committee has also
reviewed correspondence from Deloitte & Touche LLP, as required by Independence
Standards Board No. 1, INDEPENDENCE DISCUSSIONS WITH AUDIT COMMITTEES, and
discussed with Deloitte & Touche LLP their independence, as well as all
18
other matters required to be reviewed and discussed by generally accepted
auditing standards. Based on the review and discussions of the aforementioned
items, the Audit Committee recommended to the Board of Directors that the
audited financial statements of the Company for the fiscal year ended December
31, 1999 be included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1999.
AUDIT COMMITTEE
Howard Kristol (Chairman)
Philip Beekman
Charles Elson
Faith Whittlesey
(CURRENT MEMBERS)
19
STOCKHOLDER RETURN PERFORMANCE PRESENTATION
The following graph compares the cumulative total stockholder return on
the Common Stock for the period from December 31, 1994 through December 31,
1999, with the cumulative total return of the Standard & Poors Composite-500
Stock Index and an index of Company-constructed index of peer companies. The
Company-constructed peer group index includes Rubbermaid Incorporated, Newell
Co., The Gillette Company, Inc., Brunswick Corp., Salton, Inc. and
Windmere-Durable Holdings. The stock price graph assumes that the value of the
investment in Common Stock was $100 on December 31, 1994, and that all dividends
were reinvested quarterly.
COMPARISON OF TOTAL RETURN SINCE DECEMBER 31, 1994, OF SUNBEAM CORPORATION
COMMON STOCK, S&P 500, AND PEER GROUP COMPANIES
12/31/94 12/31/95 12/31/96 12/31/97 12/31/98 12/31/99
-------- -------- -------- -------- -------- --------
Sunbeam Corporation $100.00 $ 59.35 $ 99.46 $164.98 $ 26.86 $ 16.36
S&P 500 Index $100.00 $137.58 $169.17 $225.60 $290.08 $351.12
Peer Group $100.00 $129.29 $177.46 $230.76 $225.00 $194.36
PROPOSAL 2 - APPROVAL OF STOCK OPTION GRANT TO JERRY W. LEVIN
The Company and Mr. Levin entered into the Levin Agreement, which
provides, among other things, for Mr. Levin's employment as the Company's
Chairman and Chief Executive Officer. The Board of Directors is requesting
stockholder approval of the provisions of the Levin Agreement which provide for
a grant of stock options to Mr. Levin. See "Employment Agreements with Messrs.
Levin, Shapiro and Jenkins."
Pursuant to the Levin Agreement, Mr. Levin was granted on January 3,
2000 a stock option to purchase 3,000,000 shares of Common Stock at an exercise
price of $4.125 per share (the "Levin Option"), subject to approval by the
Company's stockholders at the Annual Meeting. The term of the Levin Option is
ten years, and it will vest in full as of June 30, 2003, if Mr. Levin remains
employed by the Company as of such date. A copy of the Levin Option is attached
hereto as Appendix B and the following discussion is qualified in its entirety
by reference to the specific terms of the Levin Option.
If, prior to June 30, 2003, Mr. Levin's employment is terminated by the
Company without Cause, due to death or Disability or due to a Constructive
Termination without Cause (in each case as defined in the Levin Agreement), or
if Mr. Levin's employment terminates as a result of notice by the Company of
non-renewal pursuant to the Levin Agreement, the Levin Option will immediately
become vested and exercisable in full. If the employment of Mr. Levin is
terminated prior to June 30, 2003 for Cause (as defined in the Levin Agreement)
or due to resignation by Mr. Levin, the Levin Option (if at such time the Levin
Option is unvested and unexercisable) will immediately be cancelled, and if
vested and exercisable at such time, the Levin Option will expire on the 90th
day after the date of termination of employment. It is a breach by the Company
of the Levin Agreement if the Company's stockholders fail to approve the Levin
Option at the Annual Meeting.
20
In the event of a Change in Control (as defined in the Levin
Agreement), the Levin Option will immediately become vested and exercisable and
will remain exercisable for the remainder of the term.
Payment of the purchase price for shares purchased upon an exercise of
the Levin Option may be made (i) by delivery to the Company of cash, (ii) by
delivery to the Company of shares of Common Stock then owned by Mr. Levin for at
least six months having an aggregate Fair Market Value (as defined in the Levin
Agreement) on the date of delivery equal to the purchase price of such shares;
(iii) through reasonable cashless exercise procedures that are from time to time
established by the Company; or (iv) by any combination of (i), (ii), and (iii)
above.
The Levin Option provides that Mr. Levin will have the right, by
furnishing written notice to the Company at least six months prior to any
exercise of the Levin Option, to irrevocably elect to defer any gains realized
upon or in connection with such exercise provided that any such deferral will be
made in such a manner as may reasonably be required by the Company, including
subject to such requirements as may apply in order to defer such gains for
Federal income tax purposes and to avoid a charge to the Company's earnings for
financial accounting purposes.
The Levin Option is not transferable except as follows: the Levin
Option may be transferred in whole or in part (i) by will or the laws of descent
and distribution, (ii) to any Family Member or to any trust, the sole
beneficiaries of which are Mr. Levin or his Family Members, provided that such
Family Members and/or trusts (and upon distribution their beneficiaries) agree
to be bound by the provisions of the Levin Option, or (iii) to any organization
that is exempt from Federal income taxation pursuant to Section 501(c)(3) of the
Code or any private foundation that is exempt from Federal income taxation under
Section 509 of the Code, provided that such organization or foundation agrees to
be bound by the provisions of the Levin Option. "Family Member" shall mean the
spouse, parents, and lineal descendants (including descendants by adoption) of
Mr. Levin.
In the event of any merger, consolidation, reorganization,
recapitalization, spin-off, split-up, combination, share exchange, liquidation,
dissolution, stock split, stock dividend, other distribution of securities or
other property in respect of shares or other securities (other than ordinary
recurring cash dividends), issuance of Common Stock at a price below fair market
value (other than pursuant to the exercise of any options or similar rights
granted to any employees, consultants, officers or directors of the Company),
redemption of Common Stock at a price above fair market value, or any other
change in corporate structure or capitalization affecting the rights or value of
the Common Stock, the Board will promptly make appropriate adjustment(s),
reasonably and in good faith, in the number and/or kind of equity securities
subject to the Levin Option and/or in the exercise price and/or in other terms
and conditions of the Levin Option, and/or will promptly make appropriate
provision(s), reasonably and in good faith, for supplemental payments of cash,
securities and/or other property, so as to avoid dilution or enlargement of the
rights of Mr. Levin and of the after-tax economic opportunity and value
represented by the Levin Option. In the event the outstanding shares of Common
Stock are changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a recapitalization,
reclassification, merger, consolidation, combination or similar transaction,
then, unless otherwise determined by the Board, the Levin Option will become
exercisable for the number and/or kind of capital stock, and/or the amount of
cash, securities or other property so distributed, into which the shares of
Common Stock subject to the Levin Option would have been changed or exchanged
had the Levin Option been exercised in full prior to such transaction, and if
necessary, the provisions of the Levin Option may be appropriately adjusted so
as to be applicable, as nearly as reasonably possible, to any shares of capital
stock, cash, securities or other property thereafter issuable or deliverable
upon exercise of the Levin Option, as adjusted.
In the event of any sale, merger, consolidation or other transaction in
which the Company is not the surviving entity or in which the Company becomes a
subsidiary of another entity, the Company will use its best efforts to enable
Mr. Levin (if Mr. Levin elects) to exercise the Levin Option at a time and in a
fashion that will enable Mr. Levin to receive in exchange for any Common Stock
acquired the same consideration as is received in such transaction by other
holders of the Common Stock.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the votes cast by the holders of shares of Common Stock
present in person or by proxy at the Annual Meeting, provided that the number of
total votes cast on the proposal must be more than 50% of all shares entitled to
vote on the matter. In determining whether this proposal has received the
requisite number of votes, broker non-votes will have no effect on the outcome
of such votes and abstentions will have the effect of votes against such
proposal.
21
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO JERRY W. LEVIN
PROPOSAL 3--APPROVAL OF STOCK OPTION GRANT TO PAUL E. SHAPIRO
The Company and Mr. Shapiro entered into the Shapiro Agreement, with
which provides, among other things, for Mr. Shapiro's employment as the
Company's Executive Vice President and Chief Administrative Officer. The Board
of Directors is requesting stockholder approval of the provisions of the Shapiro
Agreement which provide for a grant of stock options to Mr. Shapiro. See
"Employment Agreements with Messrs. Levin, Shapiro and Jenkins".
Pursuant to the Shapiro Agreement, Mr. Shapiro was granted on January
3, 2000 a stock option to purchase 600,000 shares of Common Stock at an exercise
price of $4.125 per share (the "Shapiro Option"), subject to approval by the
Company's stockholders at the Annual Meeting. The term of the Shapiro Option is
ten years, and it will vest in full on June 30, 2003 if Mr. Shapiro remains
employed by the Company as of such date. A copy of the Shapiro Option is
attached hereto as Appendix C and the following discussion is qualified in its
entirety by reference to the specific terms of the Shapiro Option.
If, prior to June 30, 2003, Mr. Shapiro's employment is terminated by
the Company without Cause, due to death or Disability or due to a Constructive
Termination without Cause (in each case as defined in the Shapiro Agreement) or
Mr. Shapiro's employment terminates as result of notice by the Company of
non-renewal pursuant to the Shapiro Agreement, the Shapiro Option shall
immediately become vested and exercisable in full. If the employment of Mr.
Shapiro is terminated prior to June 30, 2003 for Cause (as defined in the
Shapiro Agreement) or due to resignation by Mr. Shapiro, the Shapiro Option (if
at such time the Shapiro Option is unvested and unexercisable) shall immediately
be cancelled, and if vested and exercisable at such time, the Shapiro Option
will expire on the 90th day after the date of termination of employment. It is a
breach by the Company of the Shapiro Agreement if the Company's stockholders
fail to approve the Shapiro Option at the Annual Meeting.
In the event of a Change in Control (as defined in the Shapiro
Agreement), the Shapiro Option will immediately become vested and exercisable
and will remain exercisable for the remainder of its term.
Payment of the purchase price for shares purchased upon an exercise of
the Shapiro Option may be made (i) by delivery to the Company of cash, (ii) by
delivery to the Company of shares of Common Stock then owned by Mr. Shapiro for
at least six months having an aggregate Fair Market Value (as defined in the
Shapiro Agreement) on the date of delivery equal to the purchase price of such
shares; (iii) through reasonable cashless exercise procedures that are from time
to time established by the Company; or (iv) by any combination of (i), (ii), and
(iii) above.
The Shapiro Option provides that Mr. Shapiro will have the right, by
furnishing written notice to the Company at least six months prior to any
exercise of the Shapiro Option, to irrevocably elect to defer any gains realized
upon or in connection with such exercise provided that any such deferral will be
made in such a manner as may reasonably be required by the Company, including
subject to such requirements as may apply in order to defer such gains for
Federal income tax purposes and to avoid a charge to the Company's earnings for
financial accounting purposes.
The Shapiro Option is not transferable except as follows: the Shapiro
Option may be transferred in whole or in part (i) by will or the laws of descent
and distribution, (ii) to any Family Member or to any trust, the sole
beneficiaries of which are Mr. Shapiro or his Family Members, provided that such
Family Members and/or trusts (and upon distribution their beneficiaries) agree
to be bound by the provisions of the Shapiro Option, or (iii) to any
organization that is exempt from Federal income taxation pursuant to Section
501(c)(3) of the Code or any private foundation that is exempt from Federal
income taxation under Section 509 of the Code, provided that such organization
or foundation agrees to be bound by the provisions of the Shapiro Option.
"Family Member" shall mean the spouse, parents, and lineal descendants
(including descendants by adoption) of Mr. Shapiro.
In the event of any merger, consolidation, reorganization,
recapitalization, spin-off, split-up, combination, share exchange, liquidation,
dissolution, stock split, stock dividend, other distribution of securities or
other property in respect of shares or other securities (other than ordinary
recurring cash dividends), issuance of Common Stock at a price below fair market
value (other than pursuant to the exercise of any options or similar rights
granted to any employees, consultants, officers or directors of the Company),
redemption of Common Stock at a price above fair
22
market value, or any other change in corporate structure or capitalization
affecting the rights or value of the Common Stock, the Board will promptly make
appropriate adjustment(s), reasonably and in good faith, in the number and/or
kind of equity securities subject to the Shapiro Option and/or in the exercise
price and/or in other terms and conditions of the Shapiro Option, and/or will
promptly make appropriate provision(s), reasonably and in good faith, for
supplemental payments of cash, securities and/or other property, so as to avoid
dilution or enlargement of the rights of Mr. Shapiro and of the after-tax
economic opportunity and value represented by the Shapiro Option. In the event
the outstanding shares of Common Stock are changed into or exchanged for any
other class or series of capital stock or cash, securities or other property
pursuant to a recapitalization, reclassification, merger, consolidation,
combination or similar transaction, then, unless otherwise determined by the
Board, the Shapiro Option will become exercisable for the number and/or kind of
capital stock, and/or the amount of cash, securities or other property so
distributed, into which the shares of Common Stock subject to the Shapiro Option
would have been changed or exchanged had the Shapiro Option been exercised in
full prior to such transaction, and if necessary, the provisions of the Shapiro
Option may be appropriately adjusted so as to be applicable, as nearly as
reasonably possible, to any shares of capital stock, cash, securities or other
property thereafter issuable or deliverable upon exercise of the Shapiro Option,
as adjusted.
In the event of any sale, merger, consolidation or other transaction in
which the Company is not the surviving entity or in which the Company becomes a
subsidiary of another entity, the Company will use its best efforts to enable
Mr. Shapiro (if Mr. Shapiro elects) to exercise the Shapiro Option at a time and
in a fashion that will enable Mr. Shapiro to receive in exchange for any Common
Stock acquired the same consideration as is received in such transaction by
other holders of the Common Stock.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the votes cast by the holders of shares of Common Stock
present in person or by proxy at the Annual Meeting, provided that the number of
total votes cast on the proposal must be more than 50% of all shares entitled to
vote on the matter. In determining whether this proposal has received the
requisite number of votes, broker non-votes will have no effect on the outcome
of such votes and abstentions will have the effect of votes against such
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO PAUL E. SHAPIRO
PROPOSAL 4 - APPROVAL OF STOCK OPTION GRANT TO BOBBY G. JENKINS
The Company and Mr. Jenkins entered into the Jenkins Agreement, which
provides, among other things, for Mr. Jenkins' employment as the Company's
Executive Vice President and Chief Financial Officer. The Board of Directors is
requesting stockholder approval of the provisions of the Jenkins Agreement
which provide for a grant of stock options to Mr. Jenkins. See "Employment
Agreements with Messrs. Levin, Shapiro and Jenkins".
Pursuant to the Jenkins Agreement Mr. Jenkins was granted on January 3,
2000 a stock option to purchase 550,000 shares of Common Stock at an exercise
price of $4.125 per share (the "Jenkins Option"), subject to approval by the
Company's stockholders at the Annual Meeting. The term of the Jenkins Option is
ten years, and it will vest in full on June 30, 2003 if Mr. Jenkins remains
employed by the Company as of such date. A copy of the Jenkins Option is
attached hereto as Appendix D and the following discussion is qualified in its
entirety by reference to the specific terms of the Jenkins Option.
If, prior to June 30, 2003, Mr. Jenkins' employment is terminated by
the Company without Cause, due to death or Disability or due to a Constructive
Termination without Cause (in each case as defined in the Jenkins Agreement) or
Mr. Jenkins' employment terminates as result of notice by the Company of
non-renewal pursuant to the Jenkins Agreement, the Jenkins Option shall
immediately become vested and exercisable in full. If the employment of Mr.
Jenkins is terminated prior to June 30, 2003 for Cause (as defined in the
Jenkins Agreement) or due to resignation by Mr. Jenkins, the Jenkins Option (if
at such time the Jenkins Option is unvested and unexercisable) shall immediately
be cancelled, and if vested and exercisable at such time, the Jenkins Option
will expire on the 90th day after the date of termination of employment. It is a
breach by the Company of the Jenkins Agreement if the stockholders fail to
approve the Jenkins Option at the Annual Meeting.
23
In the event of a Change in Control (as defined in the Jenkins
Agreement), the Jenkins Options will immediately become vested and exercisable
and will remain exercisable for the remainder of the term.
Payment of the purchase price for shares purchased upon an exercise of
the Jenkins Option may be made (i) by delivery to the Company of cash, (ii) by
delivery to the Company of shares of Common Stock then owned by Mr. Jenkins for
at least six months having an aggregate Fair Market Value (as defined in the
Jenkins Agreement) on the date of delivery equal to the purchase price of such
shares; (iii) through reasonable cashless exercise procedures that are from time
to time established by the Company; or (iv) by any combination of (i), (ii), and
(iii) above.
The Jenkins Option provides that Mr. Jenkins will have the right, by
furnishing written notice to the Company at least six months prior to any
exercise of the Jenkins Option, to irrevocably elect to defer any gains realized
upon or in connection with such exercise provided that any such deferral will be
made in such a manner as may reasonably be required by the Company, including
subject to such requirements as may apply in order to defer such gains for
Federal income tax purposes and to avoid a charge to the Company's earnings for
financial accounting purposes.
The Jenkins Option is not transferable except as follows: the Jenkins
Option may be transferred in whole or in part (i) by will or the laws of descent
and distribution, (ii) to any Family Member or to any trust, the sole
beneficiaries of which are Mr. Jenkins or his Family Members, provided that such
Family Members and/or trusts (and upon distribution their beneficiaries) agree
to be bound by the provisions of the Jenkins Option, or (iii) to any
organization that is exempt from Federal income taxation pursuant to Section
501(c)(3) of the Code or any private foundation that is exempt from Federal
income taxation under Section 509 of the Code, provided that such organization
or foundation agrees to be bound by the provisions of the Jenkins Option.
"Family Member" shall mean the spouse, parents, and lineal descendants
(including descendants by adoption) of Mr. Jenkins.
In the event of any merger, consolidation, reorganization,
recapitalization, spin-off, split-up, combination, share exchange, liquidation,
dissolution, stock split, stock dividend, other distribution of securities or
other property in respect of shares or other securities (other than ordinary
recurring cash dividends), issuance of Common Stock at a price below fair market
value (other than pursuant to the exercise of any options or similar rights
granted to any employees, consultants, officers or directors of the Company),
redemption of Common Stock at a price above fair market value, or any other
change in corporate structure or capitalization affecting the rights or value of
the Common Stock, the Board will promptly make appropriate adjustment(s),
reasonably and in good faith, in the number and/or kind of equity securities
subject to the Jenkins Option and/or in the exercise price and/or in other terms
and conditions of the Jenkins Option, and/or will promptly make appropriate
provision(s), reasonably and in good faith, for supplemental payments of cash,
securities and/or other property, so as to avoid dilution or enlargement of the
rights of Mr. Jenkins and of the after-tax economic opportunity and value
represented by the Jenkins Option. In the event the outstanding shares of Common
Stock are changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a recapitalization,
reclassification, merger, consolidation, combination or similar transaction,
then, unless otherwise determined by the Board, the Jenkins Option will become
exercisable for the number and/or kind of capital stock, and/or the amount of
cash, securities or other property so distributed, into which the shares of
Common Stock subject to the Jenkins Option would have been changed or exchanged
had the Jenkins Option been exercised in full prior to such transaction, and if
necessary, the provisions of the option may be appropriately adjusted so as to
be applicable, as nearly as reasonably possible, to any shares of capital stock,
cash, securities or other property thereafter issuable or deliverable upon
exercise of the Jenkins Option, as adjusted.
In the event of any sale, merger, consolidation or other transaction in
which the Company is not the surviving entity or in which the Company becomes a
subsidiary of another entity, the Company will use its best efforts to enable
Mr. Jenkins (if Mr. Jenkins elects) to exercise the Jenkins Option at a time and
in a fashion that will enable Mr. Jenkins to receive in exchange for any Common
Stock acquired the same consideration as is received in such transaction by
other holders of the Common Stock.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the votes cast by the holders of shares of Common Stock
present in person or by proxy at the Annual Meeting, provided that the number of
total votes cast on the proposal must be more than 50% of all shares entitled to
vote on the matter. In determining whether this proposal has received the
requisite number of votes, broker non-votes will have no effect on the outcome
of such votes and abstentions will have the effect of votes against such
proposal.
24
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE STOCK OPTION GRANT TO BOBBY G. JENKINS
CERTAIN FEDERAL INCOME TAX CONSEQUENCES OF STOCK OPTIONS
No income resulted to Messrs. Levin, Shapiro and Jenkins upon the
grants of the Levin Option, the Shapiro Option and the Jenkins Option,
respectively. Upon the exercise of such a stock option, the amount by which the
fair market value of the shares acquired on the date of exercise exceeds the
applicable option exercise price would be taxed to the individual exercising
such stock option as ordinary compensation income.
Section 162(m) of the Code limits the deductibility of certain such
compensation in excess of $1,000,000 per year paid by a public corporation to
its Senior Officers. However, an exception to the deduction limitations of
Section 162(m) of the Code applies to certain performance-based compensation
provided that the plan pursuant to which such compensation will be paid has been
approved by the Company's stockholders with a separate vote and certain other
requirements have been met. The grants of the Levin Option, Shapiro Option and
Jenkins Option have been designed to enable such stock options to qualify as
performance based compensation if such stock option grants are approved by the
Company's stockholders at the Annual Meeting. Accordingly, upon the exercise of
the Levin Option, the Shapiro Option or the Jenkins Option, the Company will be
entitled to a deduction in the amount equal to the compensation income to the
employee.
PROPOSAL 5 - APPROVAL OF THE AMENDMENT OF THE SUNBEAM CORPORATION
MANAGEMENT INCENTIVE PLAN
In 1999, the Company adopted and the Company's stockholders approved
the Incentive Plan. The Company proposes an amendment to the Incentive Plan to
increase the maximum payout permitted in any one year to an individual to 250%
of annual base salary, subject to a cap of $4 million in any one year (the
"Incentive Plan Amendment").
PURPOSE
The Incentive Plan is used by the Company to attract, retain and
motivate executive, management and other employees through potential cash
bonuses based upon the performance of the Company and the employee's personal
performance. The Board of Directors believes that the Incentive Plan Amendment
is necessary to meet the Company's objectives of attracting, retaining and
compensating key employees of the Company.
AWARDS
Under the Incentive Plan, participants selected by the Committee and/or
by the appropriate management officers are eligible for cash bonuses on an
annual basis in amounts ranging from 5% to 200% of the participant's base
compensation upon attainment of specified performance objectives. At the minimum
level of Company performance ("threshold performance"), Incentive Plan
participants may be eligible to receive from 5% to 50% of their base salaries.
At another, higher level of performance ("target performance"), participants may
be entitled to receive from 10% to 100% of their base salaries. At the highest
levels of performance ("maximum targets"), participants may be entitled to
receive from 20% to 200% of their base salaries. The maximum award under the
Incentive Plan in any fiscal year to any single participant is currently
$2,000,000. The Levin Agreement provides for Incentive Plan payments of up to
250% of Mr. Levin's base salary. The Incentive Plan Amendment proposes to
increase for the Chief Executive Officer the threshold award payable in any one
fiscal year to 62.5% of base salary, the target award payable in any one fiscal
year to 125 % of base salary and the maximum award payable in any one fiscal
year to 250% of base salary, subject to a cap of $4,000,000.
The performance goals under the Incentive Plan, which are set by
management and the Compensation Committee, are based upon the following business
measurements: (i) EBITA as stated in conformity with GAAP; (ii) asset management
goals measured by either changes in days' sales of receivables and days in
inventory or operating working capital per sales dollar; and (iii) sales
targets. Each of the performance goals may relate to the results of the Company,
a business unit, product line, territory or any combination thereof, and may be
adjusted in light of any unusual or non-recurring event affecting the Company or
its financial statements. In addition, participants other than Senior Officers
will be required to meet up to five personal performance objectives. No
25
portion of an award made to a Senior Officer may be determined by personal
performance objectives. Objectives include a threshold level of performance
below which no award payment will be made and levels of performance at which
specified percentages of the target award will be paid. No compensation under
the Incentive Plan will be payable to a Senior Officer unless the Compensation
Committee first certifies the achievement of applicable Company performance
objectives. The Compensation Committee has the discretion to reduce (and, except
with respect to Senior Officers, increase) the amount of compensation actually
paid when a performance goal is met. The Compensation Committee has established
goals and maximum payment amounts that it considers to be appropriate in light
of foreseeable contingencies and future business conditions, but the Board of
Directors believes it is in the best interests of the Company and its
stockholders to allow the Committee to have this amount of flexibility.
ADMINISTRATION
The Incentive Plan is administered by the Compensation Committee. The
Compensation Committee has the authority, subject to the terms of the Incentive
Plan, to determine the bonus targets for all participants and performance
objectives to be achieved. The amount of the award payable to a Senior Officer
upon attainment of a performance goal cannot be increased by the Committee.
However, the Compensation Committee may at its discretion make appropriate
adjustments to objective performance goals to reflect the impact of
extraordinary items not reflected in such objectives. Subject to the terms of
the Incentive Plan, the Compensation Committee has the authority to construe and
interpret the Incentive Plan and to establish and amend rules and regulations
for administering the Incentive Plan.
ELIGIBILITY
Executive officers, members of management and other key employees are
eligible to participate in the Incentive Plan.
TERMINATION OF EMPLOYMENT
An employee whose employment with the Company is terminated due to
death, disability, or retirement (as defined in the applicable Sunbeam
retirement plan) will be paid a pro rata bonus based upon the term of employment
during the year and paid and computed in the same manner as the bonus otherwise
payable to employees who are Company employees at the end of the year. An
individual whose employment is terminated for any other reason during a fiscal
year will be excluded from the Incentive Plan. Notwithstanding the foregoing,
the Compensation Committee (in the case of the Senior Officers) or the plan
managers (in the case of all other participants) may approve exceptions to the
foregoing policy on an individual participant basis for participants whose
employment is terminated during a plan fiscal year.
AMENDMENTS TO OR TERMINATION OF INCENTIVE PLAN
The Company reserves the right to revise or terminate the Incentive
Plan at any time during or after a performance period. The Company may also
grant special incentive awards outside of the formulas set forth in the
Incentive Plan. Furthermore, the CEO of Sunbeam may, at his discretion, make
exceptions to the Incentive Plan, except as otherwise required by Section 162(m)
of the Code. The Incentive Plan will terminate by its terms on June 28, 2004.
BENEFITS UNDER THE PLAN
Benefits under the Incentive Plan will be determined by the
Compensation Committee from time to time and performance goal criteria may vary
from year to year and from participant to participant. Accordingly, benefits to
be paid under the Incentive Plan are not determinable at this time.
FEDERAL INCOME TAX CONSEQUENCES OF THE PLAN
Section 162(m) limits the deductibility of certain compensation in
excess of $1,000,000 per year paid by a public corporation to its Senior
Officers. However, an exception to the deduction limitations of Section 162(m)
of the Code applies to certain performance-based compensation, provided that the
plan pursuant to which such compensation will be paid has been approved by
stockholders with a separate vote and certain other requirements have been met.
In order for compensation granted pursuant to the Incentive Plan to qualify for
this exception, among other things, the material terms under which the
compensation is to be paid must be disclosed to and
26
approved by stockholders in a separate vote prior to payment, and the
compensation must be paid solely on account of the attainment of
pre-established, objective performance criteria. The Company's stockholders
approved the Incentive Plan at the Company's 1999 annual meeting of
stockholders. If the Incentive Plan Amendment is approved by the Company's
stockholders at the Annual Meeting, and the applicable performance goals are
met, the Company believes that payments under the Incentive Plan that are to be
permitted by the Incentive Plan Amendment should qualify for the
performance-based compensation exception under Section 162(m) of the Code.
Nevertheless, the Compensation Committee will maintain the discretion to pay
awards under the Incentive Plan that do not qualify for an exception to the
deduction limitation of Section 162(m) of the Code if the Compensation Committee
believes it is necessary or appropriate under the circumstances.
There will be no Federal income tax consequences to the participants or
the Company on the adoption of the Incentive Plan Amendment. The payment of cash
under the Incentive Plan to any participant will result in ordinary taxable
income equal to the amount of the bonus payment. Generally, the Company
anticipates that it will be entitled to a Federal income tax deduction in an
amount equal to such payments.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote on the matter. In determining
whether this proposal has received the requisite number of votes, broker
non-votes will have no effect on the outcome of such votes and abstentions will
have the effect of votes against such proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE AMENDMENT TO THE SUNBEAM CORPORATION MANAGEMENT INCENTIVE PLAN
PROPOSAL 6 - APPROVAL OF THE SUNBEAM CORPORATION KEY EXECUTIVE LONG TERM
INCENTIVE PROGRAM
At the Annual Meeting, the Company's stockholders will be asked to
approve the LTIP. The LTIP was adopted by the Compensation Committee and Board
of Directors in December 1999, subject to the approval of the Company's
stockholders at the Annual Meeting. A copy of the LTIP is attached hereto as
Appendix E and the following discussion is qualified in its entirety by
reference to the specific terms of the LTIP.
ADMINISTRATION
The LTIP is administered by the Compensation Committee. The
Compensation Committee has the authority, subject to the terms of the LTIP, to
determine the Performance Factors (as defined below) for all participants and
performance objectives to be achieved. The amount of the award payable to a
Senior Officer upon attainment of a Performance Factor cannot be increased by
the Committee. However, the Compensation Committee may at its discretion make
appropriate adjustments to objective Performance Factors to reflect the impact
of extraordinary items not reflected in such objectives. Subject to the terms of
the LTIP, the Compensation Committee has the authority to construe and interpret
the LTIP and to establish and amend rules and regulations for administering the
LTIP.
ELIGIBILITY
Executive officers of the Company's strategic business units and
certain other key employees of the Company's strategic business units are
eligible to participate in the LTIP.
PURPOSE
The purposes of the LTIP are to attract, retain and motivate the senior
managers of the Company's strategic business units; encourage profitability,
return on investment, and growth of the Company; enhance the major values of the
Company; and reflect the Company's commitment to adequately compensate the
employees for quality performance.
AWARDS
The LTIP provides for the payment of awards based upon the satisfaction
of Performance Factors over the Performance Period (each as defined below). At a
minimum level of performance ("threshold performance"), LTIP
27
participants will be eligible to receive a payment of anywhere from 5% to 30% of
their base salaries. At another, higher level of performance ("target
performance"), participants may be eligible to receive 10% to 60% of the
participants' base salaries for the achievement of the predetermined objectives.
At the highest level of performance ("maximum targets"), participants may be
eligible to receive 20% to 120% of their base salaries. The participants may
receive higher awards based on his or her over achievement in excess of such
goals, but in no event shall awards under the LTIP exceed 120% of base salary.
The maximum amount payable to any participant with respect to any Performance
Period is $4,000,000. A participant award will be paid in cash or in Common
Stock of the Company, or a combination of both, at the option of the Company. In
no event may the Committee increase at its discretion the amount of an award
payable to a Senior Officer upon attainment of the specified Performance
Factors. No compensation for a particular Performance Period can be paid to a
Senior Officer, unless the Compensation Committee first certifies the
achievement of the applicable Performance Factors.
"Performance Period" means the three-year period commencing on January
1, 2000, and each three-year period commencing on each January 1, thereafter
provided that a Performance Period for a participant who becomes employed by the
Company following the commencement of a fiscal year may be (as determined by the
Committee) the date of the commencement of such employment.
"Performance Factors" means the criteria and objectives which must be
met during the applicable Performance Period as a condition of the participant's
receipt of payment with respect to an Award. Performance Factors may include any
or all of the following: earnings per share, net income (before and/or after
taxes), operating income; earnings before all or any of interest, taxes,
depreciation and/or amortization ("EBIT", "EBITA" or "EBITDA"); earnings from
continuing operations, cash flows, inventory turns; working capital; return on
equity; return on assets; and/or sales (net and/or gross) or any increase or
decrease of one or more of the foregoing over a specified period. Such
Performance Factors may relate to the performance of the Company, a business
unit, product line, territory, or any combination thereof. Performance Factors
may include a threshold level of performance below which no payment will be
made, levels of performance at which specified percentages of the award will be
paid and a maximum level of performance above which no additional payment will
be made. With respect to participants who are not Senior Officers, Performance
Factors may also include other objective or subjective performance goals. The
Compensation Committee may make adjustments in the Performance Factors in
recognition of unusual or non-recurring events affecting the Company or its
financial statements.
EFFECT OF TERMINATION OF EMPLOYMENT
Unless otherwise provided by the Compensation Committee or set forth in
the LTIP, a participant must be actively employed by the Company at the end of
the Performance Period in order to be eligible to receive his or her award.
Unless otherwise provided by the Compensation Committee, if a
participant's employment is terminated as a result of death, disability or
voluntary retirement with the Company's consent prior to the end of the
Performance Period, such participant shall receive a pro rata portion of the
award that he or she would have received with respect to the applicable
Performance Period, which will be payable at such time as awards are payable to
other participants.
Unless otherwise provided by the Compensation Committee in connection
with specified terminations of employment, if a participant's employment
terminates for any reason, other than death, disability or retirement, prior to
the end of a Performance Period, no award will be payable to such participant
with respect to such Performance Period.
CHANGE OF CONTROL
In the event of a Change in Control (as defined in the LTIP), all
awards under the LTIP will vest immediately and the Company will pay to the
participant, as soon as practicable following the Change in Control, a pro rata
portion to the date of the Change in Control, the aggregate value of all awards
granted to such participant for all then uncompleted Performance Periods,
calculated as to each such award by multiplying the award that the Participant
would have earned on the last day of the Performance Period, assuming the
achievement, at the target level, of the individual and corporate Performance
Factors established with respect to such award, by the fraction obtained by
dividing the number of full months and any fractional portion of a month during
such Performance Period through the date of the Change in Control by the total
number of months contained in such Performance Period.
28
AMENDMENTS TO OR TERMINATION OF THE LTIP
The Company reserves the right to revise or terminate the LTIP at any
time during or after a Performance Period. The Company may also grant special
incentive awards outside of the formulas set forth in the LTIP. Furthermore, the
CEO of Sunbeam may, at his discretion, make exceptions to the LTIP except as
otherwise required by Section 162(m) of the Code. The LTIP will terminate by its
terms on the fifth anniversary of stockholder approval of the LTIP, provided
that awards outstanding under the LTIP on such termination date will remain
outstanding until the expiration of the Performance Period to which such award
relates or the earlier termination of the award in accordance with the LTIP.
BENEFITS UNDER THE PLAN
Performance goal criteria under the LTIP may vary from year to year and
from participant to participant. Accordingly, benefits to be paid under the LTIP
are not determinable at this time.
FEDERAL INCOME TAX CONSEQUENCES OF THE LTIP
Section 162(m) of the Code limits the deductibility of certain such
compensation in excess of $1,000,000 per year paid by a public corporation to
its Senior Officers. However, an exception to the deduction limitations of
Section 162(m) of the Code applies to certain performance-based compensation,
provided that the plan pursuant to which such compensation will be paid has been
approved by stockholders with a separate vote and certain other requirements
have been met. In order for compensation granted pursuant to the LTIP to qualify
for this exception, among other things, the material terms under which the
compensation is to be paid must be disclosed to and approved by stockholders in
a separate vote prior to payment, and the compensation must be paid solely on
account of the attainment of pre-established, objective performance criteria. If
the adoption of the LTIP is approved by the Company's stockholders at the Annual
Meeting and the applicable performance goals are met, the Company believes that
the payments under the LTIP should qualify for the performance-based
compensation exception under Section 162(m) of the Code. Nevertheless, the
Compensation Committee will maintain the discretion to authorize awards under
the LTIP that do not qualify for an exception to the deduction limitation of
Section 162(m) of the Code if the Compensation Committee believes it is
necessary or appropriate under the circumstances.
Benefits under the LTIP will depend on the future performance of the
Company and its business units over a three-year period. Consequently it is not
possible to determine the benefits that might be received by participants in the
LTIP.
The Board of Directors believes that adoption of the LTIP is necessary
to meet the Company's objectives of attracting, retaining and compensating key
employees of the Company.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or by
proxy at the Annual Meeting and entitled to vote on the matter. In determining
whether this proposal has received the requisite number of votes, broker
non-votes will have no effect on the outcome of such votes and abstentions will
have the effect of votes against such proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE SUNBEAM
CORPORATION KEY EXECUTIVE LONG TERM INCENTIVE PROGRAM
PROPOSAL 7 - APPROVAL OF THE SUNBEAM CORPORATION 2000 STOCK OPTION PLAN
APPROVAL OF THE 2000 OPTION PLAN
At the Annual Meeting, the Company's stockholders will be asked to
approve the 2000 Option Plan. The Board of Directors believes that the Company's
stock option program is an important factor in attracting and retaining the high
caliber employees essential to the Company's success and in aligning those
individuals' long-term interests with those of the Company's stockholders. As of
March 31, 2000, options to purchase an aggregate of 10,430,967 shares of Common
Stock were outstanding and only 801,567 shares of the 16,300,000 shares
originally authorized under the Sunbeam Corporation Amended and Restated Stock
Option Plan (the "Option Plan") remained
29
available for future grants. Therefore, the Board of Directors has determined to
adopt the 2000 Option Plan, subject to the approval of the Company's
stockholders at the Annual Meeting, which, as more fully described below,
provides the grant of awards covering up to 8,000,000 shares of Common Stock.
SUMMARY OF THE 2000 STOCK OPTION PLAN
GENERAL
The 2000 Option Plan will take effect upon approval by the Company's
stockholders and will continue in effect until the tenth anniversary of such
approval.
A copy of the 2000 Option Plan is attached hereto as Appendix F and the
following discussion is qualified in its entirety by reference to the specific
terms of the 2000 Option Plan.
The purpose of the 2000 Option Plan is to promote the interests of the
Company and its stockholders by providing officers, directors, employees and
consultants with appropriate option incentives and rewards to encourage them to
enter into and continue in the employ or service of the Company, to acquire a
proprietary interest in the long-term success of the Company and to reward the
performance of individuals in fulfilling their personal responsibilities for
long-term achievement. The 2000 Option Plan provides for grants of options to
purchase shares of Common Stock in the form of incentive stock options ("ISOs")
and options that do not qualify as ISOs ("NQSOs" and collectively with ISOs,
"Options"). Options granted under the 2000 Option Plan may be granted in tandem
with stock appreciation rights ("SARs"). The 2000 Option Plan also provides for
grants of SARs not in tandem with Options, restricted stock awards, stock bonus
awards and performance awards (all such awards granted under the 2000 Option
Plan, being collectively referred to herein as, "Awards").
ADMINISTRATION
The 2000 Option Plan is administered by the Compensation Committee.
Subject to the terms of the 2000 Option Plan, the Compensation Committee has the
authority to construe and interpret the 2000 Option Plan and to establish and
amend rules and regulations for administering the 2000 Option Plan. The
Compensation Committee has the authority to determine the eligible participants
under the 2000 Option Plan and the type and number of Awards to be granted under
the 2000 Option Plan.
SECURITIES SUBJECT TO THE 2000 OPTION PLAN
The 2000 Option Plan covers 8,000,000 shares of Common Stock, which may
be authorized but unissued Common Stock, authorized and issued Common Stock held
in treasury, or shares that may be acquired by the Company for purposes of the
2000 Option Plan.
The total number of shares of Common Stock subject to Options and SARs
that may be granted to any participant of the 2000 Option Plan in any year may
not exceed 1,000,000.
The 2000 Option Plan provides that in the event of certain corporate
transactions, the Compensation Committee may make equitable adjustments as it
deems necessary or appropriate to any or all of (i) the number and kind of
shares of Common Stock that may thereafter be issued in connection with Awards,
(ii) the number and kind of shares of Common Stock or other property (including
cash) issued or issuable in respect of outstanding Awards, (iii) the exercise
price, grant price, or purchase price relating to any Awards and (iv) the annual
or other limitations on the number of shares with respect to which Awards may be
granted.
ELIGIBILITY
Awards under the 2000 Option Plan may be made to such officers and
other employees, non-employee Directors and consultants of the Company as the
Compensation Committee may in its sole discretion select.
30
AWARDS
Subject to the terms of the 2000 Option Plan, the Compensation
Committee may grant to participants Awards as described below. The terms of
Award grants will be set forth in written agreements ("Award Agreements")
between the Company and the participant, which Award Agreements will contain
such provisions as the Compensation Committee may determine.
Non-employee Directors are to be granted a NQSO to purchase 5,000
shares of Common Stock on the date of election of a non-employee Director to the
Board of Directors and upon each subsequent re-election (pro-rated in the case
of an election at any time other than an annual meeting of stockholders), having
an exercise price equal to the Fair Market Value (as defined in the 2000 Option
Plan) on the date of grant, and vesting at the rate of one-third on each
anniversary of the date of grant. See "Directors Compensation."
Awards generally may be transferred by a grantee only by will or by the
laws of descent and distribution, and may be exercised only by the grantee
during his or her lifetime, provided that the Compensation Committee may provide
in the applicable Award Agreement that NQSOs may be transferred without
consideration to any member or members of the grantee's "immediate family" (as
defined in the 2000 Option Plan), a trust for the benefit of the grantee and/or
members of his or her immediate family, or a partnership or limited liability
company whose only partners or stockholders are the grantee and/or members of
his or her immediate family.
STOCK OPTIONS
Options may be exercised in such amounts and at such times as may be
determined by the Compensation Committee. Unless the Award Agreement provides
otherwise, an Option may not be exercised prior to the first anniversary of the
date of grant and will become exercisable with respect to one-third of the
shares subject thereto on each of the first, second and third anniversaries of
the date of grant. Generally, no NQSOs or SARs may be exercised and no shares of
Common Stock underlying any other Award under the 2000 Option Plan may vest or
become exercisable more than 10 years after the date of grant, provided that in
the case of an ISO granted to a person who owns more than ten percent of the
total combined voting power of all classes of stock of the Company, such time
period will be five years from the date of grant.
Options that are not exercised during the term established by the
Compensation Committee will expire without value.
The exercise price per share of the Common Stock purchased pursuant to
the exercise of an NQSO will be the Fair Market Value (as defined in the 2000
Option Plan) per share of Common Stock on the date of grant, unless otherwise
determined by the Compensation Committee. The exercise price per share of Common
Stock in the case of an ISO shall be no less than the Fair Market Value on the
date of grant and, in case of an ISO granted to an owner of stock possessing ten
percent or more of the total combined voting power of all classes of stock of
the Company, 110% of the Fair Market Value of the Common Stock on the day the
ISO is granted. The exercise price of a NQSO or ISO may be adjusted in
accordance with the antidilution provisions contained in the 2000 Option Plan.
Upon the exercise of any Option, the option price must be fully paid by
certified or cashier's check, in shares of Common Stock having a Fair Market
Value equal to the exercise price, or, subject to the approval of the
Compensation Committee, by personal check.
STOCK APPRECIATION RIGHTS
The Compensation Committee may grant SARs either alone or in
conjunction with all or part of an Option. Upon the exercise of a SAR a holder
generally is entitled, without payment to the Company, to receive cash, shares
of Common Stock or any combination thereof, as determined by the Compensation
Committee, in an amount equal to the excess of the Fair Market Value of the
shares of Common Stock subject to the SAR or portion of SAR surrendered on the
exercise date over (i) in the case of a SAR granted in tandem with an Option,
the exercise price and (ii) the aggregate appreciation base (determined pursuant
to the 2000 Option Plan) subject to the SAR or portion of SAR surrendered. SARs
vest and become exercisable in the same manner as Options.
31
RESTRICTED STOCK AWARDS AND UNRESTRICTED STOCK AWARDS
The Compensation Committee may grant restricted stock or stock bonus
Awards alone or in tandem with other Awards under the 2000 Option Plan. Vesting
of restricted stock Awards may be conditioned upon the completion of a specified
period of service, the attainment of specific performance goals or such other
factors as the Compensation Committee may determine. The Compensation Committee
may, in its discretion, require a grantee to pay an amount to acquire any
restricted or unrestricted stock, and may establish standards regarding when and
under what circumstances such payment is required to be made. During the
restricted period, the grantee may not transfer, assign or otherwise encumber or
dispose of the restricted stock, except as permitted by the Compensation
Committee. During the restricted period, the grantee will have the right to vote
the restricted stock and to receive any cash dividends if and to the extent so
provided by the Compensation Committee.
PERFORMANCE AWARDS
The Compensation Committee may grant performance Awards to acquire
shares of Common Stock based upon attainment over a specified performance cycle
of specified measures of the performance of the Company, one or more of its
subsidiaries or the participant, in each case, established by the Compensation
Committee.
The Compensation Committee may grant performance Awards intended to
constitute performance-based compensation within the meaning of Section 162(m)
of the Code. The following rules will apply to such performance Awards (as such
rules may be modified by the Compensation Committee to comply with Section
162(m) and any amendments, revisions or successor provisions): (i) payments
under the performance Award will be made solely on account of the attainment of
one or more objective performance goals established in writing by the
Compensation Committee not later than 90 days after the commencement of the
period of service to which the performance Award relates (or, if less, one-third
of such period of service); (ii) the performance goals to which the performance
Award relates will be based on one or more of the following business criteria
applied to the participant, and/or a business unit of the Company: earnings per
share; net income (before or after taxes); operating income; earnings before all
or any of interest, taxes, depreciation and/or amortization ("EBIT", "EBITA" or
"EBITDA"); inventory turns; cash flow; working capital; return on equity; return
on assets; market share; sales (net or gross) measured by product line,
territory, customer(s), or other category; earnings from continuing operations;
net worth; levels of expense, cost or liability by category, operating unit or
any other delineation; or any increase or decrease of one or more of the
foregoing over a specified period and (iii) once granted, the Compensation
Committee may not increase the amount payable under such performance Award;
provided, however, that whether or not a performance Award is intended to
constitute qualified performance-based compensation within the meaning of
Section 162(m) of the Code, the Committee may make appropriate adjustments to
the performance goals applicable to an Award to reflect the impact of
extraordinary items (as defined in the 2000 Option Plan) not reflected in such
goals.
EFFECT OF TERMINATION OF EMPLOYMENT
Unless the applicable Award agreement provides otherwise or the
Committee determines otherwise, the following will apply upon the grantee's
termination of employment or service with the Company and its subsidiaries.
Except as described below, if the employment or service of the grantee
terminates (or, in the case of a non-employee Director, failure to be reelected
as Director of the Company), Options and SARs that are exercisable as of the
date of termination of employment or service will remain exercisable, and any
payment or notice provided for under the terms of any other outstanding Award
which is vested on such date of termination may be given, for a period of 90
days from the date of such termination, and any unexercisable Awards or parts
thereof will be cancelled on the date of such termination.
If the grantee's employment or service is terminated for "Cause" as
defined in the 2000 Option Plan, all Options and SARs which are exercisable as
of the date of termination of employment or service will remain exercisable, and
any payment or notice provided for under the terms of any other outstanding
Award which is vested on such date of termination may be given, for a period of
30 days from the date of such termination, and any unvested Awards or parts
thereof will be cancelled on the date of such termination.
If the grantee voluntarily retires with the consent of the Company or
the grantee's employment or service is terminated due to permanent disability,
then the grantee's outstanding Options, SARs and/or Restricted Stock will
continue to vest and become exercisable. The grantee will be entitled to: (i)
exercise each such Option and SAR for a period of one year (or such other period
that the Compensation Committee in its discretion may choose) from and
32
including the later of (x) the date on which all portions of such Options and/or
SARs first become fully exercisable or vested and (y) the date of termination of
employment or retirement, and (ii) make any payment or give any notice provided
for under the terms of any other outstanding Award which is vested on such date
of such termination for a period of one year (or such other period that the
Compensation Committee in its discretion may choose) from the date of such
termination, and thereafter such Options, SARs, and other Awards shall be
cancelled. In the case of Awards other than Options, SARs or Restricted Stock,
upon a grantee's voluntary retirement with the consent of the Company or the
grantee's employment or service is terminated due to permanent disability, such
Awards will be treated in accordance with the applicable agreement governing
such Award.
If the grantee's employment or service with the Company or its
subsidiaries is terminated (i) by the Company or its subsidiaries without Cause
or (ii) by the grantee for "good reason", or any like term as defined under any
employment agreement with the Company or its subsidiaries to which a grantee may
be a party (or, in the case of a non-employee Director, failure to be reelected
as Director of the Company), the Options and SARs which are exercisable as of
the date of termination of employment will remain exercisable, and any payment
or notice provided for under the terms of any other outstanding Award which is
vested on the date of such termination may be given, for one year from the date
of termination, and any unexercisable Awards or portions thereof will be
cancelled on such date of termination.
Upon the grantee's death during employment or service or during the
period of continued vesting or exercisability described above (i) the grantee's
outstanding Options, SARs and Restricted Stock will become fully vested and
exercisable (and all other Awards will be cancelled), and (ii) the Options and
SARs will remain exercisable, and payment may be made or notice given, for one
year from the date of death (which period may extend more than 10 years after
the grant of the Award), and thereafter all such Options and SARs will be
cancelled.
Unless the Compensation Committee in its discretion determines
otherwise or an applicable Award provides otherwise, upon a Change of Control
(as defined in the 2000 Option Plan) of the Company, all Awards will become
fully vested and exercisable.
CERTAIN FEDERAL INCOME TAX EFFECTS
The following discussion is a brief summary of the principal United
States Federal income tax consequences under current Federal income tax laws
relating to Awards under the 2000 Option Plan. This summary is not intended to
be exhaustive and, among other things, does not describe state, local or foreign
income and other tax consequences.
NON-QUALIFIED STOCK OPTIONS. An optionee will not recognize any taxable
income upon the grant of a NQSO and the Company will not be entitled to a tax
deduction with respect to the grant of a NQSO. Upon exercise of a NQSO, the
excess of the Fair Market Value (as defined in the 2000 Option Plan) of the
Common Stock on the exercise date over the Option exercise price will be taxable
as compensation income to the optionee. The Company will generally be entitled
to a tax deduction at such time in the amount of such compensation income. The
optionee's tax basis for the Common Stock received pursuant to the exercise of a
NQSO will equal the sum of the compensation income recognized and the exercise
price.
In the event of a sale of Common Stock received upon the exercise of a
NQSO, any appreciation or depreciation after the exercise date generally will be
taxed as capital gain or loss and will be long-term capital gain or loss if the
holding period for such Common Stock is more than one year.
INCENTIVE STOCK OPTIONS. An optionee will not recognize any taxable
income at the time of grant or timely exercise of an ISO and the Company will
not be entitled to a tax deduction with respect to such grant or exercise.
Exercise of an ISO may, however, give rise to taxable compensation income, and a
tax deduction to the Company, if the ISO is not exercised on a timely basis
(generally, while the optionee is employed by the Company or within 90 days
after termination of employment) or if the optionee subsequently engages in a
"disqualifying disposition," as described below.
A sale or exchange by an optionee of shares acquired upon the exercise
of an ISO more than one year after the transfer of the shares to such optionee
and more than two years after the date of grant of the ISO will result in any
difference between the net sale proceeds and the exercise price being treated as
long-term capital gain (or loss) to the optionee. If such sale or exchange takes
place within two years after the date of grant of the ISO or within one year
from the date of transfer of the ISO shares to the optionee, such sale or
exchange will generally constitute a
33
"disqualifying disposition" of such shares that will have the following results:
any excess of (i) the lesser of (a) the Fair Market Value of the shares at the
time of exercise of the ISO and (b) the amount realized on such disqualifying
disposition of the shares over (ii) the Option exercise price of such shares,
will be ordinary income to the optionee, and the Company will be entitled to a
tax deduction in the amount of such income. Any further gain or loss after the
date of exercise generally will qualify as capital gain or loss and will not
result in any deduction by the Company.
RESTRICTED STOCK. A grantee will not recognize any income upon the
receipt of restricted stock unless the grantee elects under Section 83(b) of the
Code, within thirty days of such receipt, to recognize ordinary income in an
amount equal to the Fair Market Value of the restricted stock at the time of
receipt, less any amount paid for the shares. If the election is made, the
holder will not be allowed a deduction for amounts subsequently required to be
returned to the Company. If the election is not made, the holder will generally
recognize ordinary income, on the date that the restrictions to which the
restricted stock is subject are removed, in an amount equal to the Fair Market
Value of such shares on such date, less any amount paid for the shares. At the
time the holder recognizes ordinary income, the Company generally will be
entitled to a deduction in the same amount.
STOCK BONUS. A grantee generally will be taxed upon the grant of a
stock bonus Award. However, if at the time the shares are granted they are
subject to a substantial risk of forfeiture, as defined in the Code, the grantee
will be taxed at the time the shares are no longer subject to such risk of
forfeiture, subject to the grantee making an effective election under Section
83(b) of the Code. The amount of income recognized by the grantee will be equal
to the Fair Market Value of the shares on the date that the income is
recognized. The Company generally will be entitled to a deduction at the time
and in the amount that the employee recognizes ordinary income.
SARS. The grant of a SAR will not result in income for the grantee or
in a tax deduction for the Company. Upon the settlement of such a right, the
grantee will recognize ordinary income equal to the aggregate value of the
payment received, and the Company generally will be entitled to a tax deduction
in the same amount.
PERFORMANCE AWARDS. Generally, the grant of performance Awards has no
Federal income tax consequences at the time of grant. Rather, at the time the
shares are no longer subject to a substantial risk of forfeiture (as defined in
the Code) the holder will recognize ordinary income in an amount equal to the
Fair Market Value of such shares. A holder may, however, elect to be taxed at
the time of the grant in accordance with Section 83(b) of the Code. The Company
generally will be entitled to a deduction at the time and in the amount that the
holder recognizes ordinary income.
TRANSFERRED OPTIONS: ESTATE AND GIFT TAXES. If ISOs or NQSOs are held
until death, Federal and, if applicable, state estate and inheritance taxes
would be imposed on the Fair Market Value of the Options at the time of death.
Certain individuals, however, may realize estate and gift tax savings by making
lifetime gifts of NQSOs to permitted family members, trusts for their benefit,
or other entities. Federal and, if applicable, state gift taxes would be imposed
on the fair market value of the NQSOs at the time of the completed gift, subject
to applicable Federal and state gift tax credits and exclusions. The IRS has
taken the position that a gift of an option is not complete until the donee's
right to exercise the option is no longer conditioned on the performance of
services by the optionee. Generally, Federal and state gift and estate tax
savings may be realized if the value of the NQSOs at the time of the completed
gift is less than the value of the NQSOs (or the proceeds from the disposition
thereof) at such later time as the optionee might make a gift of the NQSOs or,
if no gift is made, at the time of the optionee's death.
The optionee (or if the optionee is deceased, the optionee's estate),
rather than the donee, will recognize ordinary income for Federal income tax
purposes upon the exercise of the transferred Option (just as if there had been
no transfer). See "Certain Federal Income Tax Effects-Nonqualified Stock
Options."
The preceding discussion is based upon the Code as presently in effect,
which is subject to change, and does not purport to be a complete description of
the Federal income tax aspects of stock options.
CERTAIN LIMITATIONS ON DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Section 162(m) of the Code limits the deductibility of certain such
compensation in excess of $1,000,000 per year paid by a public corporation to
Senior Officers. However, an exception to the deduction limitations of Section
162(m) of the Code applies to certain performance-based compensation, provided
that the plan pursuant to which such compensation will be paid has been approved
by stockholders with a separate vote and certain other requirements have been
met. In order for compensation granted pursuant to the 2000 Option Plan to
qualify for this exemption, among other things, the material terms under which
the compensation is to be paid must be disclosed to
34
and approved by the Company's stockholders in a separate vote prior to payment,
and the compensation must be paid solely on account of the attainment of
pre-established, objective performance criteria. If the adoption of the 2000
Option Plan is approved by the Company's stockholders at the Annual Meeting and
any applicable performance goals are met, the Company believes that the Awards
granted under the 2000 Option Plan should qualify for the performance-based
compensation exception under Section 162(m) of the Code. Nevertheless, the
Compensation Committee will maintain the discretion to authorize Awards under
the 2000 Option Plan that do not qualify for an exception to the deduction
limitation of Section 162(m) of the Code if the Compensation Committee believes
it is necessary or appropriate under the circumstances.
Grants under the 2000 Option Plan will be made at the discretion of the
Compensation Committee and, accordingly, are not yet determinable. In addition,
benefits under the 2000 Option Plan will depend on a number of factors,
including the fair market value of the Company's Common Stock on future dates
and the exercise decisions made by the optionees. Consequently it is not
possible to determine the benefits that might be received by optionees receiving
discretionary grants under the 2000 Option Plan.
Approval of this proposal will require the affirmative vote of the
holders of a majority of the votes cast by the holders of shares of Common Stock
present in person or by proxy at the Annual Meeting provided that the number of
total votes cast on the proposals must be more than 50% of all shares entitled
to vote on the matter. In determining whether this proposal has received the
requisite number of votes, broker non-votes will have no effect on the outcome
of such votes and abstentions will have the effect of votes against such
proposal.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL
OF THE 2000 OPTION PLAN.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
SERVICES PROVIDED BY MACANDREWS & FORBES
Under Sunbeam's August 1998 settlement agreement with an affiliate of
MacAndrews & Forbes, in addition to the services of MacAndrews & Forbes' former
executive personnel who have been managing Sunbeam since Mid-June 1998,
MacAndrews & Forbes agreed to provide management assistance and other support to
Sunbeam at its request in a wide variety of areas. Although the nature and
extent of this assistance and support had not been determined at the time of the
settlement, Sunbeam has significantly benefited from this assistance and support
in connection with the following areas: (i) negotiations with Sunbeam's lending
banks; (ii) the defense of the many lawsuits brought against Sunbeam and certain
of its present and former directors and officers; (iii) the prosecution of
claims against Sunbeam's liability insurance providers; (iv) the defense of
claims against Sunbeam by its former Chief Executive Officer and Chief Financial
Officer; (v) the restatement of certain of Sunbeam's historical financial
statements; (vi) the preparation of various SEC filings by Sunbeam and Coleman;
and (vii) various other insurance, regulatory, litigation and executive
compensation matters. MacAndrews & Forbes employees provide this assistance and
support to Sunbeam. Sunbeam does not pay MacAndrews & Forbes and its affiliates
for the services of its employees, but does reimburse them for out-of-pocket
expenses. Execution of the settlement agreement was a condition to Sunbeam's
continued employment of Messrs. Levin, Shapiro and Jenkins as officers of
Sunbeam.
SETTLEMENT OF OPTIONS
Pursuant to the Company's agreement for the acquisition of the
remaining shares of Coleman common stock in a merger transaction which was
completed in January 2000, the unexercised options under Coleman's stock option
plans were cashed out at a price per share equal to the difference between
$27.50 and the exercise price of such option. Ronald O. Perelman, the sole
stockholder of MacAndrews & Forbes, held 500,000 options for which he received a
net payment of $6,750,000. Messrs. Shapiro and Isko held 77,500 and 20,000
options, respectively, for which they received a net payment of approximately
$823,000 and $236,000, respectively.
ARRANGEMENTS WITH COLEMAN
Coleman and an affiliate of MacAndrews & Forbes are parties to a
cross-indemnification agreement pursuant to which Coleman has agreed to
indemnify such affiliate, its officers, directors, employees, control persons,
35
agents and representatives against all past, present and future liabilities,
including product liability and environmental matters, relating to the initial
assets of Coleman, that Coleman acquired from an affiliate of MacAndrews &
Forbes in December 1991. In addition, pursuant to this cross-indemnification
agreement, the MacAndrews & Forbes affiliate has agreed to indemnify Coleman and
its officers, directors, employees, agents and representatives against all other
liabilities of such MacAndrews & Forbes affiliate or any of its subsidiaries,
including liabilities relating to the assets it did not transfer to Coleman in
December 1991. This cross-indemnification agreement survived the January 1999
merger of Coleman with a subsidiary of the Company.
Coleman previously was included in the consolidated tax group for the
MacAndrews & Forbes companies and was a party to a tax sharing agreement with a
MacAndrews & Forbes affiliate, pursuant to which Coleman paid to such affiliate
the amount of taxes that would have been paid by Coleman if it were required to
file separate Federal, state or local income tax returns. The obligations of
MacAndrews & Forbes under the tax sharing agreement were terminated upon the
Company's acquisition of control of Coleman; however, the agreements related to
the Company's acquisition of Coleman provide for certain tax indemnities and tax
sharing payments among the Company and the MacAndrews & Forbes affiliates
relating to periods prior to the acquisition.
OFFICE SPACE
The Company previously subleased office space in New York City from a
subsidiary of MacAndrews & Forbes. The expense for such rent during 1999 was
approximately $90,000.00. The Company believes that the terms of such sublease
were comparable to the market rate for such space. This lease was terminated in
1999.
OTHER MATTERS
As of the date of this Proxy Statement, the Board of Directors knows of
no business that will be presented for consideration at the Annual Meeting other
than that which has been referred to above. Proxies in the enclosed form will be
voted in respect of any other business that is properly brought before the
Annual Meeting in accordance with the judgment of the person or persons voting
the proxies.
The Company is not aware of any substantial interest, direct or
indirect, by holders of Common Stock or otherwise, of any officer, Director,
nominee for Director or associate of the foregoing persons in any matter to be
acted on, as described herein, other than elections to office or interest in the
compensation plans described herein.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Exchange Act, as amended, requires the Company's
Directors, executive officers and persons who own more than 10% of a registered
class of the Company's equity securities to file certain reports regarding
ownership of the Company's Common Stock with the SEC and the New York Stock
Exchange. These insiders are required by SEC regulations to furnish the Company
with copies of all Section 16(a) forms they file. To the Company's knowledge,
based solely on a review of the copies of the Section 16(a) forms furnished to
the Company during fiscal 1999, or written representations from certain
reporting persons that no Forms 5 were required for those persons, all Section
16(a) filing requirements applicable to the Company's officers, Directors and
beneficial owners of more than 10% of the outstanding shares of Common Stock
were filed on a timely basis.
INDEPENDENT AUDITORS
The firm of Deloitte & Touche LLP has been retained by the Company as
independent auditors to audit the financial statements of the Company.
Representatives of Deloitte & Touche LLP, the Company's auditors for 1999, will
be present at the Annual Meeting and will be afforded the opportunity to make a
statement if they desire to do so and to respond to appropriate questions.
COST OF SOLICITATION
This solicitation is made on behalf of the Board of Directors and
management of the Company. The cost of soliciting proxies has been or will be
borne by the Company. Solicitation will be made by mail, and may be made
personally or by telephone by officers and other employees of the Company who
will not receive additional
36
compensation for such solicitation. In addition, arrangements will be made with
brokerage houses and other custodians, nominees and fiduciaries to send proxies
and proxy materials to their principals, and the Company may reimburse them for
any attendant expenses. The Company plans to engage a third party to solicit
proxies; however, the Company does not anticipate that the cost of such
solicitation will be material.
STOCKHOLDER PROPOSALS FOR 2001 ANNUAL MEETING
Any stockholder proposal intended to be presented for consideration at
the 2001 Annual Meeting of Stockholders and to be included in the Company's
Proxy Statement for that meeting must be received by the Secretary of the
Company at the Company's executive offices, 2381 Executive Center Drive, Boca
Raton, Florida 33431, on or before February 16, 2001.
COPIES OF FORM 10-K
THE COMPANY WILL PROVIDE A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM
10-K, INCLUDING THE FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULES
CONTAINED THEREIN, TO ANY STOCKHOLDER UPON REQUEST. REQUESTS SHOULD BE SENT TO
THE VICE PRESIDENT, INVESTOR RELATIONS, AT THE COMPANY'S EXECUTIVE OFFICES
LOCATED AT 2381 EXECUTIVE CENTER DRIVE, BOCA RATON, FLORIDA 33431 - TELEPHONE:
(561) 912-4100.
37
APPENDIX A
SUNBEAM CORPORATION
AUDIT COMMITTEE CHARTER
ORGANIZATION AND AUTHORITY
The Audit Committee shall assist the Board in monitoring the quality and
integrity of the financial statements of the Company, the corporate accounting
and reporting practices of the Company and the independence and performance of
the Company's internal and external auditors.
The Audit Committee shall be comprised of at least three directors, as
designated by the board of directors. The members of the Audit Committee shall
meet the independence and experience requirements of the New York Stock
Exchange.
The Audit Committee shall have the authority to retain legal, accounting or
other consultants to advise the Committee. The Audit Committee may request any
officer or employee of the Company or the Company's outside counsel or
independent auditor to attend a meeting of the Committee or to meet with any
members of, or consultants to, the Committee.
The Audit Committee shall make regular reports to the Board.
STATEMENT OF POLICY
In carrying out its responsibilities, the Audit Committee's policies and
procedures should remain flexible, in order to best react to changing conditions
and to ensure to the directors and shareholders that the corporate accounting
and reporting practices of the Company meet all applicable requirements. In so
doing, the Audit Committee should strive to maintain free and open communication
between the directors, the independent auditor, the internal auditors and the
financial management of the Company.
RESPONSIBILITIES
The Audit Committee shall:
o Review and reassess the adequacy of this Charter annually and recommend
any proposed changes to the Board for approval.
o Recommend to the Board the appointment of the independent auditor,
which firm is ultimately accountable to the Audit Committee and the
Board, and approve the terms and scope of their engagement.
o Meet with the independent auditor prior to the audit to review the
planning of the audit.
o Review and discuss the annual audited financial statements with
management and the independent auditor, including questioning
management and the auditor about major financial reporting issues and
judgments made in connection with the preparation of the Company's
financial statements as well as the adequacy and effectiveness of the
internal accounting and financial controls of the Company.
o Recommend to the Board, based on the review and discussion referred to
above, whether the annual audited financial statements should be
included in the annual report on Form 10-K for filing with the SEC.
o Discuss with the independent auditor the matters required to be
discussed by Statement on Auditing Standards No. 61 relating to the
conduct of the audit.
o Discuss with the independent auditor any matters required to be
discussed by Section 10A of the Private Securities Litigation Reform
Act of 1995.
o Review with management and the independent auditor the Company's
quarterly financial statements prior to the filing with the SEC of each
quarterly report on Form 10-Q.
o Review with the independent auditor any management letter provided by
the auditor and management's response to that letter.
o Review major changes to the Company's auditing and accounting
principles and practices as suggested by the independent auditor,
internal auditors or management.
o Receive periodic reports from the independent auditor regarding the
auditor's independence, discuss such reports with the auditor and, if
so determined by the Audit Committee, recommend that the Board take
appropriate action to satisfy itself of the independence of the
auditor.
o Evaluate the performance of the independent auditor and, if so
determined by the Audit Committee, recommend that the Board replace the
independent auditor.
o Review the internal audit function, including the overall plan for the
function and the independence and authority of its activities and
personnel.
o Review the significant reports to management prepared by the internal
audit function and management's actions and other responses to such
reports.
o Provide opportunity for the internal auditors and independent auditor
to meet with the members of the Audit Committee without members of
management present.
# # #
Adopted by the Board of Directors on February 10, 2000
Last amended on February 10, 2000.
2
APPENDIX B
STOCK OPTION GRANT TO JERRY W. LEVIN
NOTICE OF STOCK OPTION
GRANTED JANUARY 3, 2000
("Grant Notice")
To Jerry W. Levin:
You are hereby granted a nonqualified stock option to purchase
3,000,000 shares of Stock of Sunbeam Corporation (the "Company") at $4.125 per
share, purchasable as set forth in, and subject to the terms and conditions of,
this Grant Notice and the Agreement dated as of [January 3, 2000] between you
and the Company (the "Employment Agreement"). In the event of any conflict
between this Grant Notice and the Employment Agreement, the Employment Agreement
shall control. All capitalized terms not defined in this Grant Notice shall have
the meanings set forth in the Employment Agreement. The grant of this option is
subject to the approval of the Company's shareholders at the annual meeting of
the Company's shareholders held in 2000 ("Shareholder Approval") and the option
shall be void ab initio if such Shareholder Approval is not obtained.
1. VESTING. Subject to the provisions of Paragraphs 3 and 4 below, this
option shall become vested and exercisable on June 30, 2003.
2. EXPIRATION. This option, unless sooner terminated or exercised in
full, shall expire at 5:00 p.m. on January 3, 2010.
3. TERMINATION OF EMPLOYMENT. If, prior to June 30, 2003, your
employment is terminated by the Company without Cause, or your employment
terminates due to death or Disability, or there is a Constructive Termination
without Cause or a termination of your employment as result of notice by the
Company of non-renewal pursuant to Section 2 of the Employment Agreement, this
option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. If your employment is terminated
prior to June 30, 2003 pursuant to Section 11(c) or 11(e) of the Employment
Agreement, this option shall be immediately forfeited. Termination of your
employment for any reason on or after June 30, 2003 shall not affect this
option, except that if your employment is terminated pursuant to Section 11(c)
of 11(e) of the Employment Agreement, this option will expire at 5:00 p.m. on
the 90th day after the date of termination of employment.
4. CHANGE IN CONTROL - VESTING. In the event of a Change in Control,
this option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. Notwithstanding any other provision
of this Grant Notice, termination of your employment for any reason following
such Change in Control shall not affect this option.
5. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This option may be exercised from time to
time by delivery of written notice of exercise to the Company. Such notice shall
specify the total number of shares to be purchased and be accompanied by payment
in accordance with Paragraph 5(b) below. Such exercise shall be effective upon
delivery to the Company of such written notice together with the required
payment (or arrangement for payment). This option may be exercised for less than
the full number of shares for which the option is then exercisable, provided
that no such exercise may be for any fractional share.
(b) METHOD OF PAYMENT. Payment of the purchase price for shares
purchased upon an exercise of this option may be made (i) by delivery to the
Company of cash, a wire transfer of immediately available
funds, or a check payable to the order of the Company in an amount equal to the
purchase price of such shares; (ii) by delivery to the Company of shares of
Stock then owned by you for at least six months having an aggregate Fair Market
Value on the date of delivery equal to the purchase price of such shares; (iii)
through reasonable cashless exercise procedures that are from time to time
established by the Company (which procedures the Company agrees to establish
promptly if requested by you); or (iv) by any combination of (i), (ii), and
(iii).
(c) DELIVERY OF OPTION SHARES. The Company shall, upon payment of
the purchase price for the number of shares purchased, make prompt delivery of
such shares to you and pay all original issue and transfer taxes and all other
fees and expenses incident to such delivery. To the extent that such shares are
not promptly delivered to you when due, the Company shall promptly make you
whole for any resulting expense or loss of benefit. The Company shall deliver
cash in lieu of any fractional share.
(d) RESERVATION, REGISTRATION AND LISTING OF SHARES. The Company
shall at all times reserve, out of its authorized and unissued shares of Stock,
a number of shares sufficient to provide for the exercise in full of this
option. All shares of Stock issued upon exercise of this option shall be duly
authorized and, when issued upon such exercise, shall be (i) validly issued,
fully paid and nonassessable and (ii) shall be, and shall remain, (x) fully
registered or qualified (both for issuance and resale) under applicable Federal
and state securities laws and (y) listed, or qualified for trading, on a
national securities exchange or national market system so long as the equity
securities of the Company are so listed or qualified for trading.
(e) LEGAL REQUIREMENTS. The obligation of the Company to sell and
deliver any stock under this option is specifically subject to all applicable
laws, rules, regulations and required governmental approvals. The Company shall
use its reasonable best efforts to obtain such approvals as promptly as
practicable.
6. DEFERRAL OF OPTION GAINS. You shall have the right, by furnishing
written notice to the Company at least six months prior to any exercise of this
option, to irrevocably elect to defer any gains realized upon or in connection
with such exercise. Any such deferral, including the manner of exercise of this
option in connection with such deferral, shall be made in such manner as may
reasonably be required by the Company, including such requirements as may apply
in order to defer such gains for Federal income tax purposes and to avoid a
charge to the Company's earnings for financial accounting purposes. You may
elect to defer such gains into any non-qualified deferral plan of the Company
that accepts such deferrals on terms that satisfy the requirements of the
preceding sentence. If no such plan is available, you may elect to defer such
gains into Share Units (with a "SHARE UNIT" representing a share of Stock,
including any dividends and other distributions that may be declared or made
thereon during the period of the deferral). Amounts deferred under this
Paragraph 6 shall be paid out under the terms of your election to defer.
7. TRANSFERABILITY OF OPTION. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that this option may
be transferred in whole or in part (i) by will or the laws of descent and
distribution, (ii) to any Family Member or to any trust, the sole beneficiaries
of which are you and/or your Family Members, provided that such Family Members
and/or trusts (and upon distribution their beneficiaries) agree to be bound by
the provisions of this Grant Notice, or (iii) to any organization that is exempt
from Federal income taxation pursuant to Section 501(c)(3) of the Internal
Revenue Code or any private foundation that is exempt from Federal income
taxation under Section 509 of such Code, provided that such organization or
foundation agrees to be bound by the provisions of this Grant Notice. For
purposes of clause (ii) of the preceding sentence, "Family Member" shall mean
your spouse, parents, and lineal descendants (including descendants by
adoption). Any person to whom this option has been transferred in whole or in
part in accordance with the first sentence of this Section 7 shall, to the
extent of the transfer, succeed to your rights, and assume your obligations,
under this Grant Notice. You shall give notice to the Company of any transfer of
this option, in whole or in part, pursuant to clause (ii) or (iii) of the first
sentence of this Section 7. No transfer pursuant to this Section 7 may be for
consideration.
2
8. ADJUSTMENT PROVISIONS.
(a) GENERAL. In the event of any merger, consolidation,
reorganization, recapitalization, spin-off, split-up, combination, share
exchange, liquidation, dissolution, stock split, stock dividend, other
distribution of securities or other property in respect of shares or other
securities (other than ordinary recurring cash dividends), issuance of Stock at
a price below Fair Market Value (other than pursuant to the exercise of any
options or similar rights granted to any employees, consultants, officers or
directors of the Company), redemption of Stock at a price above Fair Market
Value, or other change in corporate structure or capitalization affecting the
rights or value of the Stock, the Board shall promptly make appropriate
adjustment(s), reasonably and in good faith, in the number and/or kind of equity
securities subject to this option and/or in the exercise price and/or in other
terms and conditions of this option, and/or shall promptly make appropriate
provision(s), reasonably and in good faith, for supplemental payments of cash,
securities and/or other property, so as to avoid dilution or enlargement of your
rights and of the after-tax economic opportunity and value represented by this
option. Notwithstanding the above, in the event the outstanding shares of Stock
shall be changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a re-capitalization,
reclassification, merger, consolidation, combination or similar transaction,
then, unless otherwise determined by the Board, this option shall thereafter
become exercisable for the number and/or kind of capital stock, and/or the
amount of cash, securities or other property so distributed, into which the
shares of Stock subject to the option would have been changed or exchanged had
the option been exercised in full prior to such transaction, and provided that,
if necessary, the provisions of the option shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of capital
stock, cash, securities or other property thereafter issuable or deliverable
upon exercise of the option. Upon any adjustment pursuant to this Paragraph
8(a), the Company shall promptly deliver to you a certificate, signed by an
officer of the Company: (x) setting forth in reasonable detail the event
requiring the adjustment and the method by which the adjustment was calculated
or otherwise determined and (y) specifying the adjustment made.
(b) CERTAIN CHANGES IN CONTROL. In the event of any sale, merger,
consolidation or other transaction in which the Company is not the surviving
entity or in which the Company becomes a subsidiary of another entity, the
Company shall use its best efforts to enable you (if you so elect) to exercise
this Option at a time and in a fashion that will enable you to receive in
exchange for any Stock thus acquired the same consideration as is received in
such transaction by other holders of Stock.
9. TAX WITHHOLDING. The Company's obligation to deliver shares upon the
exercise of this option shall be subject to your satisfaction of all applicable
Federal, state and local income, excise, and employment tax withholding
requirements ("TAX OBLIGATIONS"). You may satisfy any such tax obligations (a)
in any of the manners provided in Paragraph 5(b) above for payment of the
purchase price; (b) by authorizing the Company to withhold shares of Stock that
would otherwise be delivered to you having a Fair Market Value equal to, but not
greater than, the amount of tax required to be withheld; or (c) by any
combination of (a) and (b).
10. ASSIGNABILITY. No rights or obligations of the Company under this
Grant Notice may be assigned or transferred by the Company EXCEPT pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Grant Notice, either contractually or as a matter of law. In the event of
any merger, consolidation, sale or liquidation as described in the preceding
sentence, the Company shall take whatever action it reasonably can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.
11. MISCELLANEOUS.
(a) RESOLUTION OF DISPUTES. Any disputes arising out of or relating
to this Grant Notice shall be resolved in accordance with Section 13 of the
Employment Agreement, which shall be deemed incorporated herein in full.
3
(b) NOTICES. All notices and other communications relating to this
Grant Notice shall be given as provided in Section 22 of the Employment
Agreement.
(c) AMENDMENT; WAIVER. No provision of this Grant Notice may be
amended or modified except by an instrument or instruments in writing signed by
the parties hereto. Any party may waive compliance by another with any of the
provisions of this Grant Notice, provided that (a) no waiver of any provision
hereof shall be construed as a waiver of any other provision or subsequent
breach and (b) any such waiver shall be in writing signed by the party waiving
such compliance. The failure of any party hereto to enforce at any time any
provision hereof shall not be construed to be a waiver of such provision, nor in
any way to affect the validity hereof of any part hereof or the right of any
party thereafter to enforce each and every such provision.
(d) GOVERNING LAW. This Grant Notice shall be governed and
construed in accordance with the laws of the State of Delaware, without
reference to conflict of laws principles.
(e) SURVIVORSHIP. Except as otherwise expressly set forth in this
Grant Notice, the respective rights and obligations of you and the Company
hereunder shall survive any termination of your employment.
(f) REFERENCES. In the event of your death or a judicial
determination of your incompetence, reference in this Grant Notice to you shall
be deemed, where appropriate, to refer to your beneficiary, estate or other
legal representative.
(g) HEADINGS. Headings are provided herein for convenience of
reference only and are not to serve as a basis for interpretation or
construction of this Grant Notice.
Sunbeam Corporation
By:
--------------------------
Ronald H. Dunbar
Senior Vice President
Accepted and agreed:
- ----------------------
Jerry W. Levin
4
APPENDIX C
STOCK OPTION GRANT TO PAUL E. SHAPIRO
NOTICE OF STOCK OPTION
GRANTED JANUARY 3, 2000
("Grant Notice")
To Paul E. Shapiro:
You are hereby granted a nonqualified stock option to purchase 600,000
shares of Stock of [S Co.] (the "Company") at $4.125 per share, purchasable as
set forth in, and subject to the terms and conditions of, this Grant Notice and
the Agreement dated as of [January 3, 2000] between you and the Company (the
"Employment Agreement"). In the event of any conflict between this Grant Notice
and the Employment Agreement, the Employment Agreement shall control. All
capitalized terms not defined in this Grant Notice shall have the meanings set
forth in the Employment Agreement. The grant of this option is subject to the
approval of the Company's shareholders at the annual meeting of the Company's
shareholders held in 2000 ("Shareholder Approval") and the option shall be void
ab initio if such Shareholder Approval is not obtained.
1. VESTING. Subject to the provisions of Paragraphs 3 and 4 below, this
option shall become vested and exercisable on June 30, 2003.
2. EXPIRATION. This option, unless sooner terminated or exercised in
full, shall expire at 5:00 p.m. on January 3, 2010.
3. TERMINATION OF EMPLOYMENT. If, prior to June 30, 2003, your
employment is terminated by the Company without Cause, or your employment
terminates due to death or Disability, or there is a Constructive Termination
without Cause or a termination of your employment as result of notice by the
Company of non-renewal pursuant to Section 2 of the Employment Agreement, this
option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. If your employment is terminated
prior to June 30, 2003 pursuant to Section 11(c) or 11(e) of the Employment
Agreement, this option shall be immediately forfeited. Termination of your
employment for any reason on or after June 30, 2003 shall not affect this
option, except that if your employment is terminated pursuant to Section 11(c)
of 11(e) of the Employment Agreement, this option will expire at 5:00 p.m. on
the 90th day after the date of termination of employment.
4. CHANGE IN CONTROL - VESTING. In the event of a Change in Control,
this option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. Notwithstanding any other provision
of this Grant Notice, termination of your employment for any reason following
such Change in Control shall not affect this option.
5. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This option may be exercised from time to
time by delivery of written notice of exercise to the Company. Such notice shall
specify the total number of shares to be purchased and be accompanied by payment
in accordance with Paragraph 5(b) below. Such exercise shall be effective upon
delivery to the Company of such written notice together with the required
payment (or arrangement for payment). This option may be exercised for less than
the full number of shares for which the option is then exercisable, provided
that no such exercise may be for any fractional share.
(b) METHOD OF PAYMENT. Payment of the purchase price for shares
purchased upon an exercise of this option may be made (i) by delivery to the
Company of cash, a wire transfer of immediately available
funds, or a check payable to the order of the Company in an amount equal to the
purchase price of such shares; (ii) by delivery to the Company of shares of
Stock then owned by you for at least six months having an aggregate Fair Market
Value on the date of delivery equal to the purchase price of such shares; (iii)
through reasonable cashless exercise procedures that are from time to time
established by the Company (which procedures the Company agrees to establish
promptly if requested by you); or (iv) by any combination of (i), (ii), and
(iii).
(c) DELIVERY OF OPTION SHARES. The Company shall, upon payment of
the purchase price for the number of shares purchased, make prompt delivery of
such shares to you and pay all original issue and transfer taxes and all other
fees and expenses incident to such delivery. To the extent that such shares are
not promptly delivered to you when due, the Company shall promptly make you
whole for any resulting expense or loss of benefit. The Company shall deliver
cash in lieu of any fractional share.
(d) RESERVATION, REGISTRATION AND LISTING OF SHARES. The Company
shall at all times reserve, out of its authorized and unissued shares of Stock,
a number of shares sufficient to provide for the exercise in full of this
option. All shares of Stock issued upon exercise of this option shall be duly
authorized and, when issued upon such exercise, shall be (i) validly issued,
fully paid and nonassessable and (ii) shall be, and shall remain, (x) fully
registered or qualified (both for issuance and resale) under applicable Federal
and state securities laws and (y) listed, or qualified for trading, on a
national securities exchange or national market system so long as the equity
securities of the Company are so listed or qualified for trading.
(e) LEGAL REQUIREMENTS. The obligation of the Company to sell and
deliver any stock under this option is specifically subject to all applicable
laws, rules, regulations and required governmental approvals. The Company shall
use its reasonable best efforts to obtain such approvals as promptly as
practicable.
6. DEFERRAL OF OPTION GAINS. You shall have the right, by furnishing
written notice to the Company at least six months prior to any exercise of this
option, to irrevocably elect to defer any gains realized upon or in connection
with such exercise. Any such deferral, including the manner of exercise of this
option in connection with such deferral, shall be made in such manner as may
reasonably be required by the Company, including such requirements as may apply
in order to defer such gains for Federal income tax purposes and to avoid a
charge to the Company's earnings for financial accounting purposes. You may
elect to defer such gains into any non-qualified deferral plan of the Company
that accepts such deferrals on terms that satisfy the requirements of the
preceding sentence. If no such plan is available, you may elect to defer such
gains into Share Units (with a "SHARE UNIT" representing a share of Stock,
including any dividends and other distributions that may be declared or made
thereon during the period of the deferral). Amounts deferred under this
Paragraph 6 shall be paid out under the terms of your election to defer.
7. TRANSFERABILITY OF OPTION. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that this option may
be transferred in whole or in part (i) by will or the laws of descent and
distribution, (ii) to any Family Member or to any trust, the sole beneficiaries
of which are you and/or your Family Members, provided that such Family Members
and/or trusts (and upon distribution their beneficiaries) agree to be bound by
the provisions of this Grant Notice, or (iii) to any organization that is exempt
from Federal income taxation pursuant to Section 501(c)(3) of the Internal
Revenue Code or any private foundation that is exempt from Federal income
taxation under Section 509 of such Code, provided that such organization or
foundation agrees to be bound by the provisions of this Grant Notice. For
purposes of clause (ii) of the preceding sentence, "Family Member" shall mean
your spouse, parents, and lineal descendants (including descendants by
adoption). Any person to whom this option has been transferred in whole or in
part in accordance with the first sentence of this Section 7 shall, to the
extent of the transfer, succeed to your rights, and assume your obligations,
under this Grant Notice. You shall give notice to the Company of any transfer of
this option, in whole or in part, pursuant to clause (ii) or (iii) of the first
sentence of this Section 7. No transfer pursuant to this Section 7 may be for
consideration.
2
8. ADJUSTMENT PROVISIONS.
(a) GENERAL. In the event of any merger, consolidation,
reorganization, recapitalization, spin-off, split-up, combination, share
exchange, liquidation, dissolution, stock split, stock dividend, other
distribution of securities or other property in respect of shares or other
securities (other than ordinary recurring cash dividends), issuance of Stock at
a price below Fair Market Value (other than pursuant to the exercise of any
options or similar rights granted to any employees, consultants, officers or
directors of the Company), redemption of Stock at a price above Fair Market
Value, or other change in corporate structure or capitalization affecting the
rights or value of the Stock, the Board shall promptly make appropriate
adjustment(s), reasonably and in good faith, in the number and/or kind of equity
securities subject to this option and/or in the exercise price and/or in other
terms and conditions of this option, and/or shall promptly make appropriate
provision(s), reasonably and in good faith, for supplemental payments of cash,
securities and/or other property, so as to avoid dilution or enlargement of your
rights and of the after-tax economic opportunity and value represented by this
option. Notwithstanding the above, in the event the outstanding shares of Stock
shall be changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a re-capitalization,
reclassification, merger, consolidation, combination or similar transaction,
then, unless otherwise determined by the Board, this option shall thereafter
become exercisable for the number and/or kind of capital stock, and/or the
amount of cash, securities or other property so distributed, into which the
shares of Stock subject to the option would have been changed or exchanged had
the option been exercised in full prior to such transaction, and provided that,
if necessary, the provisions of the option shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of capital
stock, cash, securities or other property thereafter issuable or deliverable
upon exercise of the option. Upon any adjustment pursuant to this Paragraph
8(a), the Company shall promptly deliver to you a certificate, signed by an
officer of the Company: (x) setting forth in reasonable detail the event
requiring the adjustment and the method by which the adjustment was calculated
or otherwise determined and (y) specifying the adjustment made.
(b) CERTAIN CHANGES IN CONTROL. In the event of any sale, merger,
consolidation or other transaction in which the Company is not the surviving
entity or in which the Company becomes a subsidiary of another entity, the
Company shall use its best efforts to enable you (if you so elect) to exercise
this Option at a time and in a fashion that will enable you to receive in
exchange for any Stock thus acquired the same consideration as is received in
such transaction by other holders of Stock.
9. TAX WITHHOLDING. The Company's obligation to deliver shares upon the
exercise of this option shall be subject to your satisfaction of all applicable
Federal, state and local income, excise, and employment tax withholding
requirements ("TAX OBLIGATIONS"). You may satisfy any such tax obligations (a)
in any of the manners provided in Paragraph 5(b) above for payment of the
purchase price; (b) by authorizing the Company to withhold shares of Stock that
would otherwise be delivered to you having a Fair Market Value equal to, but not
greater than, the amount of tax required to be withheld; or (c) by any
combination of (a) and (b).
10. ASSIGNABILITY. No rights or obligations of the Company under this
Grant Notice may be assigned or transferred by the Company EXCEPT pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Grant Notice, either contractually or as a matter of law. In the event of
any merger, consolidation, sale or liquidation as described in the preceding
sentence, the Company shall take whatever action it reasonably can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.
11. MISCELLANEOUS.
(a) RESOLUTION OF DISPUTES. Any disputes arising out of or relating
to this Grant Notice shall be resolved in accordance with Section 13 of the
Employment Agreement, which shall be deemed incorporated herein in full.
3
(b) NOTICES. All notices and other communications relating to this
Grant Notice shall be given as provided in Section 22 of the Employment
Agreement.
(c) AMENDMENT; WAIVER. No provision of this Grant Notice may be
amended or modified except by an instrument or instruments in writing signed by
the parties hereto. Any party may waive compliance by another with any of the
provisions of this Grant Notice, provided that (a) no waiver of any provision
hereof shall be construed as a waiver of any other provision or subsequent
breach and (b) any such waiver shall be in writing signed by the party waiving
such compliance. The failure of any party hereto to enforce at any time any
provision hereof shall not be construed to be a waiver of such provision, nor in
any way to affect the validity hereof of any part hereof or the right of any
party thereafter to enforce each and every such provision.
(d) GOVERNING LAW. This Grant Notice shall be governed and
construed in accordance with the laws of the State of Delaware, without
reference to conflict of laws principles.
(e) SURVIVORSHIP. Except as otherwise expressly set forth in this
Grant Notice, the respective rights and obligations of you and the Company
hereunder shall survive any termination of your employment.
(f) REFERENCES. In the event of your death or a judicial
determination of your incompetence, reference in this Grant Notice to you shall
be deemed, where appropriate, to refer to your beneficiary, estate or other
legal representative.
(g) HEADINGS. Headings are provided herein for convenience of
reference only and are not to serve as a basis for interpretation or
construction of this Grant Notice.
Sunbeam Corporation
By:
--------------------------
Ronald H. Dunbar
Senior Vice President
Accepted and agreed:
- ----------------------
Paul E. Shapiro
4
APPENDIX D
STOCK OPTION GRANT TO BOBBY G. JENKINS
NOTICE OF STOCK OPTION
GRANTED JANUARY 3, 2000
("Grant Notice")
To Bobby G. Jenkins:
You are hereby granted a nonqualified stock option to purchase 550,000
shares of Stock of [S Co.] (the "Company") at $4.125 per share, purchasable as
set forth in, and subject to the terms and conditions of, this Grant Notice and
the Agreement dated as of [January 3, 2000] between you and the Company (the
"Employment Agreement"). In the event of any conflict between this Grant Notice
and the Employment Agreement, the Employment Agreement shall control. All
capitalized terms not defined in this Grant Notice shall have the meanings set
forth in the Employment Agreement. The grant of this option is subject to the
approval of the Company's shareholders at the annual meeting of the Company's
shareholders held in 2000 ("Shareholder Approval") and the option shall be void
ab initio if such Shareholder Approval is not obtained.
1. VESTING. Subject to the provisions of Paragraphs 3 and 4 below, this
option shall become vested and exercisable on June 30, 2003.
2. EXPIRATION. This option, unless sooner terminated or exercised in
full, shall expire at 5:00 p.m. on January 3, 2010.
3. TERMINATION OF EMPLOYMENT. If, prior to June 30, 2003, your
employment is terminated by the Company without Cause, or your employment
terminates due to death or Disability, or there is a Constructive Termination
without Cause or a termination of your employment as result of notice by the
Company of non-renewal pursuant to Section 2 of the Employment Agreement, this
option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. If your employment is terminated
prior to June 30, 2003 pursuant to Section 11(c) or 11(e) of the Employment
Agreement, this option shall be immediately forfeited. Termination of your
employment for any reason on or after June 30, 2003 shall not affect this
option, except that if your employment is terminated pursuant to Section 11(c)
of 11(e) of the Employment Agreement, this option will expire at 5:00 p.m. on
the 90th day after the date of termination of employment.
4. CHANGE IN CONTROL - VESTING. In the event of a Change in Control,
this option shall immediately become vested and exercisable in full and shall
continue to be exercisable until its scheduled expiration date under Paragraph 2
above or, if sooner, its exercise in full. Notwithstanding any other provision
of this Grant Notice, termination of your employment for any reason following
such Change in Control shall not affect this option.
5. EXERCISE OF OPTION.
(a) METHOD OF EXERCISE. This option may be exercised from time to
time by delivery of written notice of exercise to the Company. Such notice shall
specify the total number of shares to be purchased and be accompanied by payment
in accordance with Paragraph 5(b) below. Such exercise shall be effective upon
delivery to the Company of such written notice together with the required
payment (or arrangement for payment). This option may be exercised for less than
the full number of shares for which the option is then exercisable, provided
that no such exercise may be for any fractional share.
(b) METHOD OF PAYMENT. Payment of the purchase price for shares
purchased upon an exercise of this option may be made (i) by delivery to the
Company of cash, a wire transfer of immediately available funds, or a check
payable to the order of the Company in an amount equal to the purchase price of
such shares; (ii) by delivery to the Company of shares of Stock then owned by
you for at least six months having an aggregate Fair Market Value on the date of
delivery equal to the purchase price of such shares; (iii) through reasonable
cashless exercise procedures that are from time to time established by the
Company (which procedures the Company agrees to establish promptly if requested
by you); or (iv) by any combination of (i), (ii), and (iii).
(c) DELIVERY OF OPTION SHARES. The Company shall, upon payment of
the purchase price for the number of shares purchased, make prompt delivery of
such shares to you and pay all original issue and transfer taxes and all other
fees and expenses incident to such delivery. To the extent that such shares are
not promptly delivered to you when due, the Company shall promptly make you
whole for any resulting expense or loss of benefit. The Company shall deliver
cash in lieu of any fractional share.
(d) RESERVATION, REGISTRATION AND LISTING OF SHARES. The Company
shall at all times reserve, out of its authorized and unissued shares of Stock,
a number of shares sufficient to provide for the exercise in full of this
option. All shares of Stock issued upon exercise of this option shall be duly
authorized and, when issued upon such exercise, shall be (i) validly issued,
fully paid and nonassessable and (ii) shall be, and shall remain, (x) fully
registered or qualified (both for issuance and resale) under applicable Federal
and state securities laws and (y) listed, or qualified for trading, on a
national securities exchange or national market system so long as the equity
securities of the Company are so listed or qualified for trading.
(e) LEGAL REQUIREMENTS. The obligation of the Company to sell and
deliver any stock under this option is specifically subject to all applicable
laws, rules, regulations and required governmental approvals. The Company shall
use its reasonable best efforts to obtain such approvals as promptly as
practicable.
6. DEFERRAL OF OPTION GAINS. You shall have the right, by furnishing
written notice to the Company at least six months prior to any exercise of this
option, to irrevocably elect to defer any gains realized upon or in connection
with such exercise. Any such deferral, including the manner of exercise of this
option in connection with such deferral, shall be made in such manner as may
reasonably be required by the Company, including such requirements as may apply
in order to defer such gains for Federal income tax purposes and to avoid a
charge to the Company's earnings for financial accounting purposes. You may
elect to defer such gains into any non-qualified deferral plan of the Company
that accepts such deferrals on terms that satisfy the requirements of the
preceding sentence. If no such plan is available, you may elect to defer such
gains into Share Units (with a "SHARE UNIT" representing a share of Stock,
including any dividends and other distributions that may be declared or made
thereon during the period of the deferral). Amounts deferred under this
Paragraph 6 shall be paid out under the terms of your election to defer.
7. TRANSFERABILITY OF OPTION. This option is personal and no rights
granted hereunder may be transferred, assigned, pledged or hypothecated in any
way (whether by operation of law or otherwise) nor shall any such rights be
subject to execution, attachment or similar process, except that this option may
be transferred in whole or in part (i) by will or the laws of descent and
distribution, (ii) to any Family Member or to any trust, the sole beneficiaries
of which are you and/or your Family Members, provided that such Family Members
and/or trusts (and upon distribution their beneficiaries) agree to be bound by
the provisions of this Grant Notice, or (iii) to any organization that is exempt
from Federal income taxation pursuant to Section 501(c)(3) of the Internal
Revenue Code or any private foundation that is exempt from Federal income
taxation under Section 509 of such Code, provided that such organization or
foundation agrees to be bound by the provisions of this Grant Notice. For
purposes of clause (ii) of the preceding sentence, "Family Member" shall mean
your spouse, parents, and lineal descendants (including descendants by
adoption). Any person to whom this option has been transferred in whole or in
part in accordance with the first sentence of this Section 7 shall, to the
extent of the transfer, succeed to your rights, and assume your obligations,
under this Grant Notice. You shall give notice to the Company of any transfer of
this option, in whole or in part, pursuant to clause (ii) or (iii) of the first
sentence of this Section 7. No transfer pursuant to this Section 7 may be for
consideration.
2
8. ADJUSTMENT PROVISIONS.
(a) GENERAL. In the event of any merger, consolidation,
reorganization, recapitalization, spin-off, split-up, combination, share
exchange, liquidation, dissolution, stock split, stock dividend, other
distribution of securities or other property in respect of shares or other
securities (other than ordinary recurring cash dividends), issuance of Stock at
a price below Fair Market Value (other than pursuant to the exercise of any
options or similar rights granted to any employees, consultants, officers or
directors of the Company), redemption of Stock at a price above Fair Market
Value, or other change in corporate structure or capitalization affecting the
rights or value of the Stock, the Board shall promptly make appropriate
adjustment(s), reasonably and in good faith, in the number and/or kind of equity
securities subject to this option and/or in the exercise price and/or in other
terms and conditions of this option, and/or shall promptly make appropriate
provision(s), reasonably and in good faith, for supplemental payments of cash,
securities and/or other property, so as to avoid dilution or enlargement of your
rights and of the after-tax economic opportunity and value represented by this
option. Notwithstanding the above, in the event the outstanding shares of Stock
shall be changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a re-capitalization,
reclassification, merger, consolidation, combination or similar transaction,
then, unless otherwise determined by the Board, this option shall thereafter
become exercisable for the number and/or kind of capital stock, and/or the
amount of cash, securities or other property so distributed, into which the
shares of Stock subject to the option would have been changed or exchanged had
the option been exercised in full prior to such transaction, and provided that,
if necessary, the provisions of the option shall be appropriately adjusted so as
to be applicable, as nearly as may reasonably be, to any shares of capital
stock, cash, securities or other property thereafter issuable or deliverable
upon exercise of the option. Upon any adjustment pursuant to this Paragraph
8(a), the Company shall promptly deliver to you a certificate, signed by an
officer of the Company: (x) setting forth in reasonable detail the event
requiring the adjustment and the method by which the adjustment was calculated
or otherwise determined and (y) specifying the adjustment made.
(b) CERTAIN CHANGES IN CONTROL. In the event of any sale, merger,
consolidation or other transaction in which the Company is not the surviving
entity or in which the Company becomes a subsidiary of another entity, the
Company shall use its best efforts to enable you (if you so elect) to exercise
this Option at a time and in a fashion that will enable you to receive in
exchange for any Stock thus acquired the same consideration as is received in
such transaction by other holders of Stock.
9. TAX WITHHOLDING. The Company's obligation to deliver shares upon the
exercise of this option shall be subject to your satisfaction of all applicable
Federal, state and local income, excise, and employment tax withholding
requirements ("TAX OBLIGATIONS"). You may satisfy any such tax obligations (a)
in any of the manners provided in Paragraph 5(b) above for payment of the
purchase price; (b) by authorizing the Company to withhold shares of Stock that
would otherwise be delivered to you having a Fair Market Value equal to, but not
greater than, the amount of tax required to be withheld; or (c) by any
combination of (a) and (b).
10. ASSIGNABILITY. No rights or obligations of the Company under this
Grant Notice may be assigned or transferred by the Company EXCEPT pursuant to a
merger or consolidation in which the Company is not the continuing entity, or
the sale or liquidation of all or substantially all of the assets of the
Company, provided that the assignee or transferee is the successor to all or
substantially all of the assets of the Company and such assignee or transferee
assumes the liabilities, obligations and duties of the Company, as contained in
this Grant Notice, either contractually or as a matter of law. In the event of
any merger, consolidation, sale or liquidation as described in the preceding
sentence, the Company shall take whatever action it reasonably can in order to
cause such assignee or transferee to expressly assume the liabilities,
obligations and duties of the Company hereunder.
11. MISCELLANEOUS.
(a) RESOLUTION OF DISPUTES. Any disputes arising out of or relating
to this Grant Notice shall be resolved in accordance with Section 13 of the
Employment Agreement, which shall be deemed incorporated herein in full.
(b) NOTICES. All notices and other communications relating to this
Grant Notice shall be given as provided in Section 22 of the Employment
Agreement.
(c) AMENDMENT; WAIVER. No provision of this Grant Notice may be
amended or modified except by an instrument or instruments in writing signed by
the parties hereto. Any party may waive compliance by another with any of the
provisions of this Grant Notice, provided that (a) no waiver of any provision
hereof shall be
3
construed as a waiver of any other provision or subsequent breach and (b) any
such waiver shall be in writing signed by the party waiving such compliance. The
failure of any party hereto to enforce at any time any provision hereof shall
not be construed to be a waiver of such provision, nor in any way to affect the
validity hereof of any part hereof or the right of any party thereafter to
enforce each and every such provision.
(d) GOVERNING LAW. This Grant Notice shall be governed and
construed in accordance with the laws of the State of Delaware, without
reference to conflict of laws principles.
(e) SURVIVORSHIP. Except as otherwise expressly set forth in this
Grant Notice, the respective rights and obligations of you and the Company
hereunder shall survive any termination of your employment.
(f) REFERENCES. In the event of your death or a judicial
determination of your incompetence, reference in this Grant Notice to you shall
be deemed, where appropriate, to refer to your beneficiary, estate or other
legal representative.
(g) HEADINGS. Headings are provided herein for convenience of
reference only and are not to serve as a basis for interpretation or
construction of this Grant Notice.
Sunbeam Corporation
By:
--------------------------
Ronald H. Dunbar
Senior Vice President
Accepted and agreed:
- ----------------------
Bobby G. Jenkins
4
APPENDIX E
SUNBEAM CORPORATION
KEY EXECUTIVE
LONG TERM INCENTIVE PLAN
1. PURPOSE. The purpose of the Sunbeam Corporation Key Executive Long Term
Incentive Plan is to encourage improved profitability, return on investment,
and growth of the Company.
2. DEFINITIONS. The following terms, as used herein, shall have the following
meanings:
(a) "Award" shall mean an incentive compensation award, granted pursuant to
the Plan, which is contingent upon the attainment of Performance Factors with
respect to a Performance Period.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Change in Control" shall be deemed to have occurred if the event set
forth in any one of the following paragraphs shall have occurred:
(i) any Person is or becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Exchange Act), directly or indirectly, of securities of the
Company (not including in the securities Beneficially Owned by such Person
any securities acquired directly from the Company) representing 50% or more
of the Total Voting Power of the Company's then outstanding Voting
Securities, excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph (3) below;
or
(ii) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who, on the
Effective Date, constitute the Board of Directors and any new director (other
than a director whose initial assumption of office is in connection with an
actual or threatened election contest, including but not limited to a consent
solicitation, relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for election
by the Company's stockholders was approved or recommended by a vote of at
least two-thirds of the directors then still in office who either were
directors on the Effective Date or whose appointment, election or nomination
for election was previously so approved or recommended; or
(iii) there is consummated a merger or consolidation of the Company with
any other corporation other than (A) a merger or consolidation which would
result in the Voting Securities of the Company outstanding immediately prior
to such merger or consolidation continuing to represent (either by remaining
outstanding or by being converted into Voting Securities of the surviving
entity or any parent thereof) at least 50% of the Total Voting Power of the
Voting Securities of the Company or such surviving entity or any parent
thereof outstanding immediately after such merger or consolidation, or (B) a
merger or consolidation effected to implement a re-capitalization of the
Company (or similar transaction) in which no Person is or becomes the
Beneficial Owner, directly or indirectly, of securities of the Company (not
including in the securities Beneficially Owned by such Person any securities
acquired directly from the Company) representing 50% or more of the Total
Voting Power of the Company's then outstanding Voting Securities; or
(iv) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated an
agreement for the sale or disposition by the Company of all or substantially
all of the Company's assets, other than a sale or disposition by the Company
of all or substantially all of the Company's assets to an entity at least 75%
of the Total Voting Power of the Voting Securities of which are owned by
Persons in substantially the same proportions as their ownership of the
Company immediately prior to such sale.
(e) "Code" shall mean the Internal Revenue Code of 1986, as amended.
(f) "Committee" shall mean, at the discretion of the Board of Directors, a
Committee of the Board of Directors, which shall consist of two or more
persons, each of whom, unless otherwise determined by the Board of Directors,
is an "outside director" within the meaning of Section 162(m) of the Code and
a "nonemployee director" within the meaning of Rule 16b-3 under the Exchange
Act.
(g) "Common Stock" shall mean the common stock of the Company, par value $.01
per share.
(h) "Company" shall mean Sunbeam Corporation, a Delaware corporation, and
where appropriate each of its Subsidiaries.
(i) "Covered Employee" shall have the meaning set forth in Section 162(m)(3)
of the Code.
(j) "Disability" shall mean permanent disability as determined pursuant to
the Company's long-term disability plan or policy, in effect at the time of
such Disability.
(k) "Effective Date" shall mean the date as of which this Plan is adopted by
the Board of Directors.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
(m) "Participant" shall mean an officer or other employee of the Company who
is, pursuant to Section 4 of the Plan, selected to participate herein.
(n) "Performance Factors" shall mean the criteria and objectives, determined
by the Committee, which must be met during the applicable Performance Period
as a condition of the Participant's receipt of payment with respect to an
Award. Performance Factors may include any or all of the following: earnings
per share; net income (before and/or after taxes); operating income; earnings
before all or any of interest, taxes, depreciation and/or amortization
("EBIT", "EBITA" or "EBITDA"); earnings from continuing operations; cash
flow; inventory turns; working capital; return on equity; return on assets
and/or sales (net and/or gross); or any increase or decrease of one or more
of the foregoing over a specified period. Such Performance Factors may relate
to the performance of the Company, a business unit, product line, or any
combination thereof. With respect to Participants who are not Senior
Officers, Performance Factors may also include such objective or subjective
performance goals as the Committee may, from time to time, establish. Subject
to Section 5(b) hereof, the Committee shall have the sole discretion to
determine whether, or to what extent, Performance Factors are achieved;
PROVIDED, HOWEVER, that whether or not a Performance Award is intended to
constitute qualified performance-based compensation within the meaning of
Section 162(m) of the Code, the Committee shall have the authority to make
appropriate adjustments in Performance Factors under an Award to reflect the
impact of extraordinary items not reflected in such goals. For purposes of
the Plan, extraordinary items shall be defined as (1) any profit or loss
attributable to acquisitions or dispositions of stock or assets; (2) any
changes in accounting standards that may be required or permitted by the
Financial Accounting Standards Board or adopted by the Company after the goal
is established; (3) all items of gain, loss or expense for the year related
to restructuring charges for the Company; (4) all items of gain, loss or
expense for the year determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment of a
business; (5) all items of gain, loss or expense for the year related to
discontinued operations that do not qualify as a segment of a business as
defined in APB Opinion No. 30; and (6) such other items as may be prescribed
by Section 162(m) of the Code and the Treasury Regulations thereunder as may
be in effect from time to time, and any amendments, revisions or successor
provisions and any changes thereto.
(o) "Performance Period" shall mean the three-year period commencing on
January 1, 2000, and each three-year period commencing on each January 1,
thereafter; provided that a Performance Period for a Participant who becomes
employed by the Company following the commencement of a Performance Period
may be the date of the commencement of such employment.
2
(p) "Plan" shall mean this Sunbeam Corporation Key Executive Long Term
Incentive Plan.
(q) "Senior Officer" shall mean an officer of the Company who is or may be
determined to be potential "Named Executive Officer" under Section 162(m).
Not later than the 90th day of each Performance Period, the Committee, in its
sole and absolute discretion, shall designate one or more Senior Officers as
participants in the Plan for such Performance Period and shall specify the
terms and conditions for the determination and payment of an Award to each
such Senior Officer for such Performance Period.
(r) "Subsidiary" shall mean a "subsidiary corporation" within the meaning of
Section 424(f) of the Code.
(s) "Total Voting Power" shall mean the aggregate number of votes which all
shares of Voting Securities would be entitled to cast in the election of
Directors if all such shares were present at a meeting of the Company's
stockholders for the purpose of electing Directors.
(t) "Voting Securities" shall mean the shares of capital stock, excluding the
votes of shares of capital Stock having such entitlement only upon the
happening of a contingency, entitled to cast votes in the election of
Directors to the Board of Directors.
3. ADMINISTRATION. The Plan shall be administered by a Committee of the Board.
The Committee shall have the authority in its sole discretion, subject to and
not inconsistent with the express provisions of the Plan, to administer the
Plan and to exercise all the powers and authorities either specifically
granted to it under the Plan or necessary or advisable in the administration
of the Plan, including, without limitation, the authority to grant Awards; to
determine the persons to whom and the time or times at which Awards shall be
granted; to determine the terms, conditions, restrictions and performance
criteria, including Performance Factors, relating to any Award; to determine
whether, to what extent, and under what circumstances an Award may be
settled, cancelled, forfeited, or surrendered; to make adjustments in the
Performance Factors in recognition of unusual or non-recurring events
affecting the Company or the financial statements of the Company, or in
response to changes in applicable laws, regulations, or accounting
principles; to construe and interpret the Plan and any Award; to prescribe,
amend and rescind rules and regulations relating to the Plan; to determine
the terms and provisions of Awards; and to make all other determinations
deemed necessary or advisable for the administration of the Plan; provided
that with respect to participants other than the Senior Officers of the
Company, the Committee may appoint the Chief Executive Officer or other
appropriate officers of the Company to administer the Plan in accordance with
this Section 3.
All decisions, determinations and interpretations of the Committee shall
be final and binding on all persons, including the Company and the
Participant (or any person claiming any rights under the Plan from or through
any Participant).
Subject to Section 162(m) of the Code or as otherwise required for
compliance with Rule 16b-3 or other applicable law, the Committee may
delegate all or any part of its authority under the Plan to an employee,
employees or committee of employees.
4. ELIGIBILITY. Awards may be granted to officers and other employees of the
Company's strategic business units in the sole discretion of the Committee.
Subject to Section 5(b) below, in determining the persons to whom Awards
shall be granted and the Performance Factors relating to each Award, the
Committee shall take into account such factors as the Committee shall deem
relevant in connection with accomplishing the purposes of the Plan.
5. TERMS OF AWARDS. Awards granted pursuant to the Plan shall be communicated to
Participants in such form as the Committee shall from time to time approve
and the terms and conditions of such Awards shall be set forth therein.
(a) IN GENERAL. Not later than 90 days after the commencement of each
Performance Period (but in no case after 25% of the Performance Period has
elapsed), the Committee shall specify in writing, by resolution of the
Committee or other appropriate action, with respect to a Performance Period,
the Performance Factors applicable to each Award; PROVIDED, HOWEVER, that
with respect to Participants other than Senior Officers, the Chief Executive
Officer or other persons designated by the Chief Executive Officer, shall
have the authority to establish Performance Factors applicable to each such
Award. Performance Factors may include a threshold level of performance below
which no payment shall be
3
made, levels of performance at which specified percentages of the Award shall
be paid and a maximum level of performance above which no additional payment
shall be made; PROVIDED, HOWEVER, that whether or not a Performance Award is
intended to constitute qualified performance-based compensation within the
meaning of Section 162(m) of the Code, the Committee shall have the authority
to make appropriate adjustments in Performance Factors under an Award to
reflect the impact of extraordinary items not reflected in such goals. Unless
otherwise provided by the Committee (or the CEO with respect to Participants
who are not Senior Officers) in connection with specified terminations of
employment, payment in respect of Awards shall be made only if and to the
extent the Performance Factors with respect to such Performance Period are
attained.
(b) SPECIAL PROVISIONS REGARDING AWARDS. Notwithstanding anything to the
contrary contained herein, in no event shall payment in respect of Awards
granted for a Performance Period be made to a Participant in an amount that
exceeds $4,000,000 and in no event may the Committee increase at its
discretion the amount of an Award payable to a Covered Employee upon
attainment of the specified Performance Factors.
(c) TIME AND FORM OF PAYMENT. Unless otherwise determined by the Committee,
all payments in respect of Awards granted under this Plan shall be made, in
cash or in Common Stock, or combination of both, at the Committee's
discretion (or at the discretion of the Chief Executive Officer, in the case
of any Participant other than a Senior Officer), within a reasonable period
after the end of the Performance Period. In the case of Participants who are
Covered Employees, unless otherwise determined by the Committee, such
payments shall be made only after achievement of the Performance Factors has
been certified by the Committee.
6. TERM. Subject to the approval of the Plan by the holders of a majority of the
Company's common stock represented and voting on the proposal at the annual
meeting of Company stockholders held during 2000, the Plan shall be effective
for the fiscal year of the Company commencing January 1, 2000, and shall
continue in effect until the fifth anniversary of the date of such
stockholder approval, unless earlier terminated as provided below.
Notwithstanding the termination of the Plan on the fifth anniversary of
stockholder approval of the Plan, Awards granted under the Plan shall remain
outstanding subject to the terms of the Plan until the expiration of the
Performance Period to which such Award relates or the earlier termination of
the Award in accordance with the provisions of the Plan. Upon such approval
of the Plan by the Company's stockholders, all Awards under the Plan awarded
on or after January 1, 2000 shall be fully effective as if the stockholders
had approved the Plan on or before January 1, 2000.
7. GENERAL PROVISIONS.
(a) COMPLIANCE WITH LEGAL REQUIREMENTS. The Plan and the granting and payment
of Awards, and the other obligations of the Company under the Plan shall be
subject to all applicable federal and state laws, rules and regulations, and
to such approvals by any regulatory or governmental agency as may be
required.
(b) NONTRANSFERABILITY. Awards shall not be transferable by a Participant
except upon the Participant's death following the end of the Performance
Period but prior to the date payment is made, in which case the Award shall
be transferable by will or the laws of descent and distribution.
(c) NO RIGHT TO CONTINUED EMPLOYMENT. Nothing in the Plan or in any Award
granted pursuant hereto shall confer upon any Participant the right to
continue in the employ of the Company or to be entitled to any remuneration
or benefits not set forth in the Plan or to interfere with or limit in any
way the right of the Company to terminate such Participant's employment.
(d) WITHHOLDING TAXES. Where a Participant or other person is entitled to
receive a payment pursuant to an Award hereunder, the Company shall have the
right to require the Participant or such other person to pay to the Company
the amount of any taxes that the Company may be required to withhold before
delivery to such Participant or other person of such payment.
(e) AMENDMENT, TERMINATION AND DURATION OF THE PLAN. The Board or the
Committee may at any time and from time to time alter, amend, suspend, or
terminate the Plan in whole or in part; PROVIDED THAT, no amendment that
requires shareholder approval in order for the Plan to continue to comply
with Code Section 162(m) shall be effective unless the same shall be approved
by the requisite vote of the shareholders of the Company. Notwithstanding the
foregoing, no amendment shall affect adversely any
4
of the rights of any Participant under any Award following the end of the
Performance Period to which such Award relates.
(f) PARTICIPANT RIGHTS. No Participant shall have any claim to be granted any
Award under the Plan, and there is no obligation for uniformity of treatment
for Participants.
(g) CHANGE IN CONTROL. In the event of a Change in Control, all Awards under
the Plan shall vest immediately and the Company shall pay to the Participant,
as soon as practicable following the Change in Control, a pro rata portion to
the date of Change in Control, the aggregate value of all Awards granted to
such Participant for all then uncompleted Performance Periods, calculated as
to each such Award by multiplying the Award that the Participant would have
earned on the last day of the Performance Period, assuming the achievement,
at the target level, of the Performance Factors established with respect to
such Award, by the fraction obtained by dividing the number of full months
and any fractional portion of a month during such Performance Period through
the date of the Change in Control by the total number of months contained in
such Performance Period.
(h) TERMINATION OF EMPLOYMENT.
(i) Unless otherwise provided by the Committee or set forth below, a
Participant must be actively employed by the Company at the end of the
Performance Period in order to be eligible to receive his or her Award.
(ii) Unless otherwise provided by the Committee, if a Participant's
employment is terminated as result of death, Disability or voluntary
retirement with the consent of the Company prior to the end of the
Performance Period, such Participant shall receive a pro rata portion of
his or her Award that he or she would have received with respect to the
applicable Performance Period, which shall be payable at such time that
Awards are payable to other Participants.
(iii) Unless otherwise provided by the Committee in connection with
specified terminations of employment, if a Participant's employment
terminates for any reason, other than death, Disability or voluntary
retirement with the consent of the Company, prior to the end of a
Performance Period, no Award shall be payable to such Participant with
respect to such Performance Period.
(i) UNFUNDED STATUS OF AWARDS. The Plan is intended to constitute an
"unfunded" plan for incentive and deferred compensation. With respect to any
payments not yet made to a Participant pursuant to an Award, nothing
contained in the Plan or any Award shall give any such Participant any rights
that are greater than those of a general creditor of the Company.
(j) GOVERNING LAW. The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware
without giving effect to the conflict of laws principles thereof.
(k) EFFECTIVE DATE. The Plan shall take effect upon its adoption by the
Board; PROVIDED, HOWEVER, that the Plan shall be subject to the requisite
approval of the shareholders of the Company in order to comply with Section
162(m) of the Code. In the absence of such approval, the Plan (and any Awards
made pursuant to the Plan prior to the date of such approval) shall be null
and void.
(l) BENEFICIARY. A Participant may file with the Committee a written
designation of a beneficiary on such form as may be prescribed by the
Committee and may, from time to time, amend or revoke such designation. If no
designated beneficiary survives the Participant and an Award is payable to
the Participant's beneficiary pursuant to Section 6(b), the executor or
administrator of the Participant's estate shall be deemed to be the grantee's
beneficiary.
(m) INTERPRETATION. The Plan is designed and intended to comply, to the
extent applicable, with Section 162(m) of the Code, and all provisions hereof
shall be construed in a manner to so comply.
5
APPENDIX F
THE SUNBEAM CORPORATION 2000 STOCK OPTION PLAN
(EFFECTIVE AS OF _______, 2000)
1. ESTABLISHMENTS AND PURPOSE.
The purpose of the Sunbeam Corporation Stock Option Plan ("Plan") is to
promote the interests of the Company and the stockholders of the Company by
providing directors, officers, employees and consultants of the Company with
appropriate incentives and rewards to encourage them to enter into and continue
in the employ or service of the Company, to acquire a proprietary interest in
the long-term success of the Company and to reward the performance of
individuals in fulfilling their personal responsibilities for long-range
achievements.
2. ADMINISTRATION OF THE PLAN.
The Plan shall be administered by a Committee appointed by the Board of
Directors. The Committee shall have the authority, in its sole discretion,
subject to and not inconsistent with the express terms and provisions of the
Plan, to administer the Plan and to exercise all the powers and authorities
either specifically granted to it under the Plan or necessary or advisable in
the administration of the Plan, including, without limitation, the authority to
grant Awards; to determine the persons to whom and the time or times at which
Awards shall be granted; to determine the type and number of Awards to be
granted; to determine the number of shares of stock to which an Award may relate
and the terms, conditions, restrictions and performance criteria relating to any
Award; to determine whether, to what extent, and under what circumstances an
Award may be settled, cancelled, forfeited, exchanged or surrendered; to make
adjustments in the performance goals in recognition of unusual or nonrecurring
events affecting the Company or the financial statements of the Company (to the
extent not inconsistent with Section 162(m) of the Code, if applicable), or in
response to changes in applicable laws, regulations, or accounting principles;
to construe and interpret the Plan and any Award; to prescribe, amend and
rescind rules and regulations relating to the Plan; to determine the terms and
provisions of Agreements; and to make all other determinations deemed necessary
or advisable for the administration of the Plan. All decisions, determinations
and interpretations of the Committee shall be final and binding on all persons,
including the Company and the Participant (or any person claiming any rights
under the Plan from or through any Participant).
The Committee may, in its absolute discretion, without amendment to the
Plan, (a) accelerate the date on which any Option granted under the Plan becomes
exercisable, waive or amend the operation of Plan provisions respecting exercise
after termination of employment or otherwise adjust any of the terms of such
Option, and (b) accelerate the vesting date, or waive any condition imposed
hereunder, with respect to any share of Restricted Stock, or other Award or
otherwise adjust any of the terms applicable to any such Award.
Subject to Section 162(m) of the Code and except as required by Rule
16b-3 with respect to grants of Options to individuals who are subject to
Section 16 of the Exchange Act, or as otherwise required for compliance with
Rule 16b-3 or other applicable law, the Committee may delegate all or any part
of its authority under the Plan to an employee, employees or committee of
employees.
Subject to Section 162(m) of the Code and Section 16 of the Exchange
Act, to the extent the Committee deems it necessary, appropriate or desirable to
comply with foreign law or practices and to further the purpose of the Plan, the
Committee may, without amending this Plan, establish special rules applicable to
Options granted to Participants who are foreign nationals, are employed outside
the United States, or both, including rules that differ from those set forth in
the Plan, and grant Options to such Participants in accordance with those rules.
3. DEFINITIONS.
(a) "Agreement" shall mean the written agreement between the Company
and a Participant evidencing an Award.
(b) "Award" shall mean any Option, Restricted Stock, Stock Bonus award,
Stock Appreciation Right or Performance Award granted pursuant to the
terms of the Plan.
(c) "Board of Directors" shall mean the Board of Directors of the
Company.
(d) "Cause" shall have the meaning as set forth in the particular
employment agreement or a severance pay policy applicable to the
Participant. If neither an employment agreement nor a severance pay
policy is applicable to the Participant, Cause shall mean (1) the
willful and continued failure by the Participant to substantially
perform his or her duties and obligations to the Company, including
without limitation, repeated refusal to follow the reasonable
directions of the employer, knowing violation of law in the course of
performance of the duties of Participant's employment with the Company,
repeated absences from work without a reasonable excuse, and
intoxication with alcohol or illegal drugs while on the Company's
premises during regular business hours (other than any such failure
resulting from his or her incapacity due to physical or mental
illness); (2) fraud or material dishonesty against the Company; or (3)
a conviction or plea of guilty or nolo contendre to a felony or a crime
involving material dishonesty. For purposes of this Section 2(e), no
act, or failure to act, on a Participant's part shall be considered
"willful" unless done, or omitted to be done, by the Participant in bad
faith and without reasonable belief that his or her action or omission
was in the best interest of the Company. Determination of Cause shall
be made by the Committee in its sole discretion.
(e) A "Change in Control" shall be deemed to have occurred if the event
set forth in any one of the following paragraphs shall have occurred:
(1) any Person is or becomes the "Beneficial Owner" (as defined in
Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Company (not including in the securities
Beneficially Owned by such Person any securities acquired directly
from the Company) representing 50% or more of the Total Voting
Power of the Company's then outstanding Voting Securities,
excluding any Person who becomes such a Beneficial Owner in
connection with a transaction described in clause (A) of paragraph
(3) below; or
(2) the following individuals cease for any reason to constitute a
majority of the number of directors then serving: individuals who,
on the Effective Date, constitute the Board of Directors and any
new director (other than a director whose initial assumption of
office is in connection with an actual or threatened election
contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose
appointment or election by the Board of Directors or nomination for
election by the Company's stockholders was approved or recommended
by a vote of at least two-thirds of the directors then still in
office who either were directors on the Effective Date or whose
election or nomination for election was previously so approved or
recommended; or
(3) there is consummated a merger or consolidation of the Company
with any other corporation other than (A) a merger or consolidation
which would result in the Voting Securities of the Company
outstanding immediately prior to such merger or consolidation
continuing to represent (either by remaining outstanding or by
being converted into Voting Securities of the surviving entity or
any parent thereof) at least 50% of the Total Voting Power of the
Voting Securities of the Company or such surviving entity or any
parent thereof outstanding immediately after such merger or
consolidation, or (B) a merger or consolidation effected to
implement a re-capitalization of the Company (or similar
transaction) in which no Person is or becomes the Beneficial Owner,
directly or indirectly, of securities of the Company (not including
in the securities Beneficially Owned by such Person any securities
acquired directly from the Company) representing 50% or more of the
Total Voting Power of the Company's then outstanding Voting
Securities; or
(4) the stockholders of the Company approve a plan of complete
liquidation or dissolution of the Company or there is consummated
an agreement for the sale or disposition by the Company of all or
substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the
Company's assets to an entity at least 75% of the Total Voting
Power of the Voting Securities of which are owned by Persons in
substantially the same proportions as their ownership of the
Company immediately prior to such sale.
(f) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and any regulations promulgated thereunder.
(g) "Committee" shall mean, at the discretion of the Board of
Directors, a Committee of the Board of Directors, which shall consist
of two or more persons, each of whom, unless otherwise determined by
2
the Board of Directors, is an "outside director" within the meaning of
Section 162(m) of the Code and a "non-employee director" within the
meaning of Rule 16b-3.
(h) "Company" shall mean Sunbeam Corporation, a Delaware corporation,
and, where appropriate, each of its Subsidiaries.
(i) "Company Stock" shall mean the common stock of the Company, par
value $.01 per share.
(j) "Disability" shall mean permanent disability as determined pursuant
to the Company's long-term disability plan or policy, in effect at the
time of such Disability.
(k) "Effective Date" shall mean the date as of which this Plan is
adopted by the Board of Directors.
(l) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
(m) "The "Fair Market Value" of a share of Company Stock, as of a date
of determination, shall mean (1) the closing sales price per share of
Company Stock on the national securities exchange on which such stock
is principally traded on the date of the grant of such Award, or (2) if
the shares of Company Stock are not listed or admitted to trading on
any such exchange, the closing price as reported by the Nasdaq Stock
Market for the last preceding date on which there was a sale of such
stock on such exchange, or (3) if the shares of Company Stock are not
then listed on a national securities exchange or traded in an
over-the-counter market or the value of such shares is not otherwise
determinable, such value as determined by the Committee in good faith
upon the advice of a qualified valuation expert. In no event shall the
fair market value of any share of Company Stock, the Option exercise
price of any Option, the appreciation base per share of Company Stock
under any Stock Appreciation Right, or the amount payable per share of
Company Stock under any other Award, be less than the par value per
share of Company Stock.
(n) "Incentive Stock Option" shall mean an Option that is an "incentive
stock option" within the meaning of Section 422 of the Code, or any
successor provision, and that is designated by the Committee as an
Incentive Stock Option.
(o) "Non-employee Director" shall mean a member of the Board of
Directors who is not an employee of the Company.
(p) "Nonqualified Stock Option" shall mean an Option other than an
Incentive Stock Option.
(q) "Option" shall mean an option to purchase shares of Company Stock
granted pursuant to Section 6(b).
(r) "Participant" shall mean an employee, consultant or director of the
Company to whom an Award is granted pursuant to the Plan, and, upon the
death of the employee, consultant or director, his or her successors,
heirs, executors and administrators, as the case may be.
(s) "Performance Award" shall mean an Award granted to a Participant
pursuant to Section 6(e) hereof.
(t) "Person" shall have the meaning set forth in Section 3(a)(9) of the
Exchange Act, except that such term shall not include (1) the Company,
(2) a trustee or other fiduciary holding securities under an employee
benefit plan of the Company, (3) an underwriter temporarily holding
securities pursuant to an offering of such securities, or (4) a
corporation owned, directly or indirectly, by the stockholders of the
Company in substantially the same proportions as their ownership of
stock of the Company.
(u) "Restricted Stock" shall mean a share of Company Stock which is
granted pursuant to the terms of Section 6(d) hereof.
(v) "Rule 16b-3" shall mean the Rule 16b-3 promulgated under the
Exchange Act, as amended from time to time.
(w) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.
3
(x) "Stock Appreciation Right" shall mean the right, granted to a
Participant under Section 6(c), to be paid an amount measured by the
appreciation in the Fair Market Value of a share of Company Stock from
the date of grant to the date of exercise of the right, with payment to
be made in cash and/or a share of Company Stock, as specified in the
Award or determined by the Committee.
(y) "Stock Bonus" shall mean a bonus payable in shares of Company Stock
granted pursuant to Section 6(d) hereof.
(z) "Subsidiary" shall mean a "subsidiary corporation" within the
meaning of Section 424(f) of the Code.
(aa) "Total Voting Power" shall mean the aggregate number of votes
which all shares of Voting Securities would be entitled to cast in the
election of Directors if all such shares were present at a meeting of
the Company's stockholders for the purpose of electing Directors.
(bb) "Voting Securities" shall mean the shares of capital stock,
excluding the votes of shares of capital Stock having such entitlement
only upon the happening of a contingency, entitled to cast votes in the
election of Directors to the Board of Directors.
4. STOCK SUBJECT TO THE PLAN.
(a) SHARES AVAILABLE FOR AWARDS.
The maximum number of shares of Company Stock reserved for
issuance under the Plan shall be 8,000,000 shares (subject to
adjustment as provided herein). Such shares may be authorized but
unissued Company Stock or authorized and issued Company Stock held in
the Company's treasury. The Committee may direct that any stock
certificate evidencing shares issued pursuant to the Plan shall bear a
legend setting forth such restrictions on transferability as may apply
to such shares pursuant to the Plan.
(b) INDIVIDUAL LIMITATION.
To the extent required by Section 162(m) of the Code, the
total number of shares of Company Stock subject to Awards awarded to
any Participant during any tax year of the Company, shall not exceed
1,000,000 shares (subject to adjustment as provided herein).
(c) ADJUSTMENT FOR CHANGE IN CAPITALIZATION.
In the event that the Committee shall determine that any
dividend or other distribution (whether in the form of cash, Company
Stock, or other property), re-capitalization, Company Stock split,
reverse Company Stock split, reorganization, merger, consolidation,
spin-off, combination, repurchase, or share exchange, or other similar
corporate transaction or event, makes an adjustment appropriate in
order to prevent dilution or enlargement of the rights of Participants
under the Plan, then the Committee shall make such equitable changes or
adjustments as it deems necessary or appropriate to any or all of (1)
the number and kind of shares of Company Stock which may thereafter be
issued in connection with Awards, (2) the number and kind of shares of
Company Stock issued or issuable in respect of outstanding Awards, (3)
the exercise price, grant price or purchase price relating to any
Award, and (4) the maximum number of shares subject to Awards which may
be awarded to any employee during any tax year of the Company; provided
that, with respect to Incentive Stock Options, any such adjustment
shall be made in accordance with Section 424 of the Code.
(d) ADJUSTMENT FOR CHANGE OR EXCHANGE OF SHARES FOR OTHER
CONSIDERATION.
In the event the outstanding shares of Company Stock shall be
changed into or exchanged for any other class or series of capital
stock or cash, securities or other property pursuant to a
re-capitalization, reclassification, merger, consolidation, combination
or similar transaction ("Transaction"), then, unless otherwise
determined by the Committee, (1) each Option shall thereafter become
exercisable for the number and/or kind of capital stock, and/or the
amount of cash, securities or other property so distributed, into which
the shares of Company Stock subject to the Option would have been
changed or exchanged had the Option been exercised in full prior to
such transaction, provided that, if the kind or amount of capital stock
or cash, securities or other property received in such transaction is
not the same for each
4
outstanding share, then the kind or amount of capital stock or cash,
securities or other property for which the Option shall thereafter
become exercisable shall be the kind and amount so receivable per share
by a plurality of the shares of Company Stock, and provided further
that, if necessary, the provisions of the Option shall be appropriately
adjusted so as to be applicable, as nearly as may reasonably be, to any
shares of capital stock, cash, securities or other property thereafter
issuable or deliverable upon exercise of the Option, and (2) each Award
that is not an Option and that is not automatically changed in
connection with the Transaction shall represent the number and/or kind
of shares of capital stock, and/or the amount of cash, securities or
other property so distributed, into which the number of shares of
Company Stock covered by the Award would have been changed or exchanged
had they been held by a stockholder.
(e) REUSE OF SHARES.
The following shares of Company Stock shall again become
available for Awards: except as provided below, any shares subject to
an Award that remain unissued upon the cancellation, surrender,
exchange or termination of such Award for any reason whatsoever; and
any shares of Restricted Stock forfeited. Notwithstanding the
foregoing, upon the exercise of any Award granted in tandem with any
other Awards, such related Awards shall be cancelled to the extent of
the number of shares of Company Stock as to which the Award is
exercised and such number of shares shall no longer be available for
Awards under the Plan.
5. ELIGIBILITY.
The persons who shall be eligible to receive Awards pursuant
to the Plan shall be such employees of the Company (including officers
of the Company, whether or not they are directors of the Company),
Non-employee Directors, and consultants, as the Committee shall select
from time to time.
6. AWARDS UNDER THE PLAN.
(a) AGREEMENT.
The Committee may grant Awards in such amounts and with such
terms and conditions, as the Committee shall determine, subject to the
terms and provisions of the Plan. Each Award granted under the Plan
(except an unconditional Stock Bonus) shall be evidenced by an
Agreement as the Committee may in its sole discretion deem necessary or
desirable and unless the Committee determines otherwise, such Agreement
must be signed, acknowledged and returned by the Participant to the
Company. Unless the Committee determines otherwise, any failure by the
Participant to sign and return the Agreement shall cause such Award to
the Participant to be null and void. By accepting an Award or other
benefits under the Plan (including participation in the Plan), each
Participant shall be conclusively deemed to have indicated acceptance
and ratification of, and consent to, all provisions of the Plan and the
Agreement.
(b) STOCK OPTIONS.
(i) The Committee may grant Options under the Plan to purchase
shares of Company Stock in such amounts and subject to such
terms and conditions as the Committee shall from time to time
determine in its sole discretion, subject to the terms and
provisions of the Plan. Unless otherwise determined by the
Committee, the exercise price of the share purchasable under
an Option shall be the Fair Market Value per share on the
grant date of such Option.
(ii) Each Non-employee Director immediately and automatically
upon his or her election or re-election as a director of the
Company shall be granted a Nonqualified Stock Option to
purchase 5,000 shares of Company Stock. The exercise price for
each share of Company Stock purchasable under such Option
shall be the Fair Market Value per share on the date of the
grant of such Option. Unless terminated earlier pursuant to
Section 7 hereof, such Option shall vest and become
exercisable at the rate of one-third of such grant on each of
the first, second and third anniversaries of the date of the
grant and shall remain exercisable until the day prior to the
tenth anniversary of the date of grant and shall terminate and
cease to be exercisable on the tenth anniversary of the date
of grant as described in subsection (f)(ii) below.
5
(iii) Each Option shall be clearly identified in the
applicable Agreement as either an Incentive Stock Option or a
Nonqualified Stock Option.
(iv) SPECIAL REQUIREMENTS FOR INCENTIVE STOCK OPTIONS.
(A) To the extent that the aggregate Fair Market
Value of shares of Company Stock with respect to
which Incentive Stock Options are exercisable
for the first time by a Participant during any
calendar year under the Plan and any other stock
option plan of the Company shall exceed
$100,000, such Options shall be treated as
Nonqualified Stock Options. Such Fair Market
Value shall be determined as of the date on
which each such Incentive Stock Option is
granted.
(B) No Incentive Stock Option may be granted to
an individual if, at the time of the proposed
grant, such individual owns (or is deemed to own
under the Code) stock possessing more than ten
percent of the total combined voting power of
all classes of stock of the Company unless (A)
the exercise price of such Incentive Stock
Option is at least 110 percent of the Fair
Market Value of a share of Company Stock at the
time such Incentive Stock Option is granted and
(B) such Incentive Stock Option is not
exercisable after the expiration of five years
from the date such Incentive Stock Option is
granted.
(C) STOCK APPRECIATION RIGHTS.
(i) The Committee may grant a related Stock Appreciation Right
in connection with all or any part of an Option granted under
the Plan, either at the time such Option is granted or at any
time thereafter prior to the exercise, termination or
cancellation of such Option, and subject to such terms and
conditions as the Committee shall from time to time determine
in its sole discretion, consistent with the terms and
provisions of the Plan. The holder of a related Stock
Appreciation Right shall, subject to the terms and conditions
of the Plan and the applicable Agreement, have the right by
exercise thereof to surrender to the Company for cancellation
all or a portion of such related Stock Appreciation Right, but
only to the extent that the related Option is then exercisable,
and to be paid therefor an amount equal to the excess (if any)
of (i) the aggregate Fair Market Value of the shares of Company
Stock subject to the related Stock Appreciation Right or
portion thereof surrendered (determined as of the exercise
date), over (ii) the aggregate appreciation base of the shares
of Company Stock subject to the Stock Appreciation Right or
portion thereof surrendered. Upon any exercise of a related
Stock Appreciation Right or any portion thereof, the number of
shares of Company Stock subject to the related Option shall be
reduced by the number of shares of Company Stock in respect of
which such Stock Appreciation Right shall have been exercised.
(ii) The Committee may grant unrelated Stock Appreciation
Rights in such amount and subject to such terms and conditions,
as the Committee shall from time to time determine in its sole
discretion, subject to the terms and provisions of the Plan.
The holder of an unrelated Stock Appreciation Right shall,
subject to the terms and conditions of the Plan and the
applicable Agreement, have the right to surrender to the
Company for cancellation all or a portion of such Stock
Appreciation Right, but only to the extent that such Stock
Appreciation Right is then exercisable, and to be paid therefor
an amount equal to the excess (if any) of (i) the aggregate
Fair Market Value of the shares of Company Stock subject to the
Stock Appreciation Right or portion thereof surrendered
(determined as of the exercise date), over (ii) the aggregate
appreciation base of the shares of Company Stock subject to the
Stock Appreciation Right or portion thereof surrendered.
(iii) The grant or exercisability of any Stock Appreciation
Right shall be subject to such conditions, as the Committee, in
its sole discretion, shall determine.
(d) RESTRICTED STOCK AND STOCK BONUS.
(i) The Committee may grant Restricted Stock awards, alone or in
tandem with other Awards under the Plan, subject to such
restrictions, terms and conditions, as the Committee shall
determine in its sole discretion and as shall be evidenced by
the applicable Agreements. The
6
vesting of a Restricted Stock award granted under the Plan may
be conditioned upon the completion of a specified period of
employment or service with the Company or any Subsidiary, upon
the attainment of specified performance goals, and/or upon such
other criteria as the Committee may determine in its sole
discretion.
(ii) Each Agreement with respect to a Restricted Stock award
shall set forth the amount (if any) to be paid by the
Participant with respect to such Award and when and under what
circumstances such payment is required to be made.
(iii) The Committee may, upon such terms and conditions as the
Committee determines, provide that a certificate or certificates
representing the shares underlying a Restricted Stock award
shall be registered in the Participant's name and bear an
appropriate legend specifying that such shares are not
transferable and are subject to the provisions of the Plan and
the restrictions, terms and conditions set forth in the
applicable Agreement, or that such certificate or certificates
shall be held in escrow by the Company on behalf of the
Participant until such shares become vested or are forfeited.
Except as provided in the applicable Agreement, no shares
underlying a Restricted Stock award may be assigned,
transferred, or otherwise encumbered or disposed of by the
Participant until such shares have vested in accordance with the
terms of such Award.
(iv) If and to the extent that the applicable Agreement may so
provide, a Participant shall have the right to vote and receive
dividends on the shares underlying a Restricted Stock award
granted under the Plan. Unless otherwise provided in the
applicable Agreement, any stock received as a dividend on such
Restricted Stock or in connection with a stock split of the
shares underlying a Restricted Stock award shall be subject to
the same restrictions as the shares underlying such Restricted
Stock award.
(v) The Committee may grant Stock Bonus awards, alone or in
tandem with other Awards under the Plan, subject to such terms
and conditions as the Committee shall determine in its sole
discretion and as may be evidenced by the applicable Agreement.
(e) PERFORMANCE AWARDS.
(i) The Committee may grant Performance Awards, alone or in
tandem with other Awards under the Plan, to acquire shares of
Company Stock in such amounts and subject to such terms and
conditions as the Committee shall from time to time in its sole
discretion determine, subject to the terms of the Plan.
(ii) In the event that the Committee grants a Performance Award
(other than a Nonqualified Stock Option or Incentive Stock
Option), that is intended to constitute qualified
performance-based compensation within the meaning of Section
162(m) of the Code, the following rules shall apply (as such
rules may be modified by the Committee to conform with Code
section 162(m) and the Treasury Regulations thereunder as may be
in effect from time to time, and any amendments, revisions or
successor provisions thereto): (a) payments under the
Performance Award shall be made solely on account of the
attainment of one or more objective performance goals
established in writing by the Committee not later than 90 days
after the commencement of the period of service to which the
Performance Award relates (or if less, one-third of such period
of service); (b) the performance goal(s) to which the
Performance Award relates shall be based on one or more of the
following business criteria as applied to the Participant and/or
a business unit of the Company: (1) earnings per share; (2) net
income (before or after taxes); (3) operating income; (4)
earnings before all or any of interest, taxes, depreciation
and/or amortization ("EBIT", "EBITA" or "EBITDA"); (5) inventory
turns; (6) cash flow; (7) working capital; (8) return on equity;
(9) return on assets; (10) market share; (11) sales (net or
gross) measured by product line, territory, customer(s), or
other category; (12) earnings from continuing operations; (13)
net worth; (14) levels of expense, cost or liability by
category, operating unit or any other delineation; (15) or any
increase or decrease of one or more of the foregoing over a
specified period; and. (c) once granted, the Committee may not
have discretion to increase the amount payable under such
Performance Award, provided, however, that whether or not a
Performance Award is intended to constitute qualified
performance-based compensation within the meaning of Section
162(m) of the Code, the Committee shall have the authority to
make appropriate adjustments in performance goals under a
Performance
7
Award to reflect the impact of extraordinary items not reflected
in such goals. For purposes of the Plan, extraordinary items
shall be defined as (1) any profit or loss attributable to
acquisitions or dispositions of stock or assets; (2) any changes
in accounting standards that may be required or permitted by the
Financial Accounting Standards Board or adopted by the Company
after the goal is established; (3) all items of gain, loss or
expense for the year related to restructuring charges for the
Company; (4) all items of gain, loss or expense for the year
determined to be extraordinary or unusual in nature or
infrequent in occurrence or related to the disposal of a segment
of a business; (5) all items of gain, loss or expense for the
year related to discontinued operations that do not qualify as a
segment of a business as defined in APB Opinion No. 30; and (6)
such other items as may be prescribed by Section 162(m) of the
Code and the Treasury Regulations thereunder as may be in effect
from time to time, and any amendments, revisions or successor
provisions and any changes thereto. The Committee shall, prior
to making payment under any award under this Section 6(e),
certify in writing that all applicable performance goals have
been attained.
(f) EXERCISABILITY OF AWARDS; CANCELLATION OF AWARDS IN CERTAIN
CASES.
(i) Except as hereinafter provided, each Agreement with respect
to an Option or Stock Appreciation Right shall set forth the
period during which and the conditions subject to which the
Option or Stock Appreciation Right evidenced thereby shall be
exercisable, and each Agreement with respect to a Restricted
Stock award or Performance Award shall set forth the period
after which and the conditions subject to which the shares
underlying such Award shall vest or be deliverable, all such
periods and conditions to be determined by the Committee in its
sole discretion. Unless the applicable Agreement otherwise
specifies, no Option or Stock Appreciation Right shall be
exercisable prior to the first anniversary of the date of grant,
and each Option or Stock Appreciation Right granted under the
Plan shall become cumulatively exercisable with respect to
one-third of the shares of Company Stock subject thereto,
rounded down to the next lower full share, on the first
anniversary of the date of grant, and with respect to an
additional one-third of the shares of Company Stock subject
thereto, rounded down to the next lower full share, on the
second anniversary of the date of grant, and shall become 100%
exercisable on the third anniversary of the date of grant, and,
subject to Section 7 hereof, shall remain exercisable until the
day prior to the tenth anniversary of the date of grant and
shall terminate and cease to be exercisable on the tenth
anniversary of the date of grant.
(ii) Except as provided in Section 7(d), no Option or Stock
Appreciation Right may be exercised and no shares of Company
Stock underlying any other Award under the Plan may vest or
become deliverable more than ten (10) years after the date of
grant.
(iii) An Option or Stock Appreciation Right shall be exercisable
by the filing of a written notice of exercise or a notice of
exercise in such other manner with the Company, on such form and
in such manner as the Committee shall in its sole discretion
prescribe, and by payment in accordance with Section 6(g)
hereof.
(iv) Unless the applicable Agreement provides otherwise, in the
case of an Option or Stock Appreciation Right, at any time after
the Company's receipt of notice of exercise of an Option or
Stock Appreciation Right and prior to the Option or Stock
Appreciation Right exercise date (as defined in subsection iv),
and in the case of a Restricted Stock, Stock Bonus or
Performance Award, at any time within the six (6) business days
immediately preceding the otherwise applicable date on which the
previously Restricted Stock, Stock Bonus or Performance Award
would otherwise have become unconditionally vested or the shares
subject thereto unconditionally deliverable, the Committee, in
its sole discretion, shall have the right, by written notice to
the Participant, to cancel such Award or any part thereof if the
Committee, in its sole judgment, determines that legal or
contractual restrictions and/or blockage and/or other market
considerations would make the Company's acquisition of Company
Stock from, and/or the Participant's sale of Company Stock to,
the public markets illegal, impracticable or inadvisable. If the
Committee determines to cancel all or any part of an Award, the
Company shall pay to the Participant an amount equal to the
excess of (i) the aggregate Fair Market Value of the shares of
Company Stock subject to the Award or part thereof cancelled
(determined as of the Option or Stock Appreciation Right
exercise date, or the date that shares would have been
unconditionally vested or delivered in the case of Restricted
Stock, Stock Bonus or Performance Award),
8
over (ii) the aggregate Option exercise price or appreciation
base of the Stock Appreciation Right or part thereof cancelled
(in the case of an Option or Stock Appreciation Right) or any
amount payable as a condition of delivery of shares (in the case
of Restricted Stock, Stock Bonus or Performance Award). Such
amount shall be delivered to the Participant as soon as
practicable after such Award or part thereof is cancelled.
(v) Unless the applicable Agreement provides otherwise, the
"Option exercise date" and the "Stock Appreciation Right
exercise date" shall be the date that the notice of exercise,
together with payment, are received by the Company.
(g) PAYMENT OF AWARD PRICE.
(i) Unless the applicable Agreement provides otherwise or the
Committee in its sole discretion otherwise determines, any
notice of exercise of an Option or Stock Appreciation Right must
be accompanied by payment of the full Option or Stock
Appreciation Right exercise price. If Section 6(f)(iv) applies,
and the six (6) business day delay for the Option exercise date
or Stock Appreciation Right exercise date is applied, the
Participant shall have no right to pay the Option or Stock
Appreciation Right exercise price or to receive Company Stock
with respect to the Option or Stock Appreciation Right exercise
prior to the lapse of such six business days.
(ii) Payment of the Option exercise price and of any other
payment required by the Agreement to be made pursuant to any
other Award shall be made in any combination of the following:
(a) by certified or official bank check payable to the Company
(or the equivalent thereof acceptable to the Committee); (b)
with the consent of the Committee in its sole discretion, by
personal check (subject to collection) which may in the
Committee's discretion be deemed conditional; and/or (c) unless
otherwise provided in the applicable Agreement, by delivery of
previously-acquired shares of Company Stock owned by the
Participant for at least six (6) months (or such longer or
shorter period as the Committee may in its discretion determine
that will not result in variable accounting treatment) having a
Fair Market Value (determined as of the Option exercise date, in
the case of Options, or other relevant payment date as
determined by the Committee, in the case of other Awards) equal
to the portion of the exercise price being paid thereby. Payment
in accordance with clause (a) of this Section 6(g)(ii) may be
deemed to be satisfied, if and to the extent that the applicable
Agreement so provides or the Committee permits, by delivery to
the Company of an assignment of a sufficient amount of the
proceeds from the sale of Company Stock to be acquired pursuant
to the Award to pay for all of the Company Stock to be acquired
pursuant to the Award and an authorization to the broker or
selling agent to pay that amount to the Company and to effect
such sale at the time of exercise or other delivery of shares of
Company Stock.
(iii) In the case of payment made in accordance with clause (c)
of Section 6(g)(ii), if (A) the person paying the Option
exercise price or other payment required by an Agreement is the
holder of the Award and is actively employed or in active
service as a consultant or Non-employee Director on the exercise
date and (B) all or any portion of the previously-acquired
shares of Company Stock so delivered in payment were acquired by
the holder upon exercise of an Option or Stock Appreciation
Right, then, if and to the extent that the applicable Agreement
so provides or the Committee in its sole discretion so
determines, the Participant shall be granted a replacement
Option on the Option exercise date or other payment date to
purchase a number of shares of Company Stock equal to the number
of shares so delivered in payment, at an exercise price equal to
the Fair Market Value of the Company Stock on the exercise date
and upon such other terms, conditions and restrictions (which
may be the same as or different than the terms, conditions and
restrictions of the Award so exercised) as the Committee may
determine and set forth in the Agreement evidencing such
replacement Option.
7. TERMINATION OF EMPLOYMENT.
(a) Unless the applicable Agreement provides otherwise or the Committee
in its sole discretion determines otherwise, upon termination of a
Participant's employment or service with the Company and its
Subsidiaries by the Company or its Subsidiaries for Cause, the portions
of outstanding Options and Stock Appreciation Rights granted to such
Participant that are exercisable as of the date of such termination of
employment or service shall remain exercisable, and any payment or
notice
9
provided for under the terms of any other outstanding Award as respects
the portion thereof that is vested as of the date of such termination
of employment or service may be given, for a period of thirty (30) days
from and including the date of termination of employment or service
(and shall thereafter terminate). Unless the applicable Agreement
provides otherwise or the Committee in its sole discretion determines
otherwise, all portions of outstanding Options or Stock Appreciation
Rights granted to such Participant which are not exercisable as of the
date of such termination of employment or service described in this
subsection (a), and any other outstanding Award which is not vested as
of the date of such termination of employment or service described in
this subsection (a), shall terminate upon the date of such termination
of employment or service described in this subsection (a).
(b) Unless the applicable Agreement provides otherwise or the Committee
in its sole discretion determines otherwise, upon termination of the
Participant's employment or service with the Company and its
Subsidiaries for any reason other than as described in subsection (a),
(c), (d) or (e) hereof, the portions of outstanding Options and Stock
Appreciation Rights granted to such Participant that are exercisable as
of the date of such termination of employment or service shall remain
exercisable, and any payment or notice provided for under the terms of
any other outstanding Award as respects the portion thereof vested as
of the date of such termination of employment or service may be given,
for a period of ninety (90) days from and including the date of
termination of employment or service (and shall terminate thereafter).
Unless the applicable Agreement provides otherwise or the Committee in
its sole discretion determines otherwise, all portions of outstanding
Options or Stock Appreciation Rights granted to such Participant which
are not exercisable as of the date of such termination of employment or
service described in this subsection (b), and any other outstanding
Award which is not vested as of the date of such termination of
employment or service described in this subsection (b), shall terminate
upon the date of such termination of employment or service described in
this subsection (b).
(c) Unless the applicable Agreement provides otherwise or the Committee
in its sole discretion determines otherwise, if the Participant
voluntarily retires with the consent of the Company or the
Participant's employment or service terminates due to Disability, all
outstanding Options, Stock Appreciation Rights and/or Restricted Stock
awards shall continue to vest in accordance with the terms of the
applicable Agreements. The Participant shall be entitled to (i)
exercise each such Option and Stock Appreciation Right for a period of
one (1) year from and including the later of (x) the date such entire
Option or Stock Appreciation Right becomes fully exercisable in
accordance with the terms of such Award and (y) the date of termination
of employment or retirement, and thereafter such Options or Stock
Appreciation Rights shall be cancelled, and (ii) make any payment or
give any notice provided for under the terms of any other outstanding
Award which is vested on such date of termination of employment or
service for a period of one (1) year from the date of termination of
employment or service described in this subsection (c), and thereafter
such Awards or parts thereof shall be cancelled. Notwithstanding the
foregoing, the Committee may in its sole discretion provide for a
longer or shorter period for exercise of an Option or Stock
Appreciation Right or may permit a Participant to continue vesting
under an Option, Stock Appreciation Right or Restricted Stock award or
to make any payment, give any notice or to satisfy any other condition
under any other Award. Unless the applicable Agreement provides
otherwise or the Committee in its sole discretion determines otherwise,
any outstanding Award other than an Option, Stock Appreciation Right or
Restricted Stock award described above in this subsection (c) that is
not vested on such date of termination of employment or service
described in this subsection (c) shall terminate as of the date of such
termination of employment or service described in this subsection (c).
The Committee may in its sole discretion determine (i) whether any
termination of employment or service is a voluntary retirement with the
Company's consent or is due to Disability for purposes of the Plan,
(ii) whether any leave of absence (including any short-term or
long-term medical leave) constitutes a termination of employment or
service within the meaning of the Plan, (iii) the applicable date of
any such termination of employment or service, and (iv) the impact, if
any, of any of the foregoing on Awards under the Plan.
(d) Unless the applicable Agreement provides otherwise or the Committee
in its sole discretion determines otherwise, if the Participant's
employment or service terminates by reason of death, or if the
Participant's employment or service terminates under circumstances
providing for continued rights under subsection (b) or (c) of this
Section 7 and during the period of continued rights described in
subsection (b) or (c) the Participant dies, all outstanding Options,
Restricted Stock awards and Stock Appreciation Rights granted to such
Participant shall become fully vested and exercisable, all other Awards
shall be cancelled, and the person to whom such rights have passed
under the Participant's will (or if applicable, pursuant to the laws of
descent and distribution) shall be entitled to exercise such Options or
Stock Appreciation Rights for a period of one (1) year from and
including the date of the Participant's
10
death (notwithstanding that such period may extend more than 10 years
after the grant of the Award) and thereafter all such Options or Stock
Appreciation Rights or parts thereof and all other Awards shall be
cancelled.
(e) Unless the applicable Agreement provides otherwise or the Committee
in its sole discretion determines otherwise, upon termination of a
Participant employment or service with the Company and its Subsidiaries
(i) by the Company or its Subsidiaries without cause or (ii) by the
Participant for "good reason" or any like term as defined under any
employment agreement with the Company or a Subsidiary to which a
Participant may be a party to (or in the case of a Non-employee
Director upon such Non-employee Director's failure to be re-elected as
a Non-employee Director of the Company), the portions of outstanding
Options and Stock Appreciation Rights granted to such Participant which
are exercisable as of the date of termination of employment or service
of such Participant shall remain exercisable, and any payment or notice
provided for under the terms of any other outstanding Award as respects
the portion thereof vested as of the date of termination of employment
or service may be given, for a period of one (1) year from and
including the date of termination of employment or service and shall
terminate thereafter as described in this subsection (e). Unless the
applicable Agreement provides otherwise or the Committee in its sole
discretion determines otherwise, any other outstanding Award shall
terminate as of the date of such termination of employment or service
described in this subsection (e).
8. EFFECT OF CHANGE IN CONTROL.
Unless the applicable Agreement provides otherwise or the Committee in
its sole discretion determines otherwise, in the event of a Change of
Control:
(a) any Award carrying a right to exercise that was not previously
exercisable and vested shall become fully exercisable and vested; and
(b) the restrictions, deferral limitations, payment conditions, and
forfeiture conditions applicable to any other Award granted under the
Plan shall lapse and such Awards shall be deemed fully vested, and any
performance goals imposed with respect to Awards shall be deemed to be
fully achieved.
9. MISCELLANEOUS.
(a) Notwithstanding any other provision hereof, the Committee shall
have the right at any time to deny or delay a Participant's exercise of
Options if such Participant is reasonably believed by the Committee (i)
to be engaged in material conduct adversely affecting the Company or
(ii) to be contemplating such conduct, unless and until the Committee
shall have received reasonable assurance that the Participant is not
engaged in, and is not contemplating, such material conduct adverse to
the interests of the Company.
(b) Participants are and at all times shall remain subject to the
trading window policies adopted by the Company from time to time
throughout the period of time during which they may exercise Options,
Stock Appreciation Rights or sell shares of Company Stock acquired
pursuant to the Plan.
10. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO AWARD.
(a) Nothing contained in the Plan or any Agreement shall confer upon
any Participant any right with respect to the continuation of
employment or service by the Company or interfere in any way with the
right of the Company, subject to the terms of any separate employment
agreement to the contrary, at any time to terminate such employment or
service or to increase or decrease the compensation of the Participant.
(b) No person shall have any claim or right to receive an Award
hereunder. The Committee's granting of an Award to a Participant at any
time shall neither require the Committee to grant any other Award to
such Participant or other person at any time or preclude the Committee
from making subsequent grants to such Participant or any other person.
11
11. SECURITIES MATTERS.
(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any interests in the Plan or any
shares of Company Stock to be issued hereunder or to effect similar
compliance under any state laws. Notwithstanding anything herein to the
contrary, the Company shall not be obligated to cause to be issued or
delivered any certificates evidencing shares of Company Stock pursuant
to the Plan unless and until the Company is advised by its counsel that
the issuance and delivery of such certificates is in compliance with
all applicable laws, regulations of governmental authority and the
requirements of any securities exchange on which shares of Company
Stock are traded. The Committee may require, as a condition of the
issuance and delivery of certificates evidencing shares of Company
Stock pursuant to the terms hereof, that the recipient of such shares
make such agreements and representations, and that such certificates
bear such legends, as the Committee, in its sole discretion, deems
necessary or desirable.
(b) The transfer of any shares of Company Stock hereunder shall be
effective only at such time as counsel to the Company shall have
determined that the issuance and delivery of such shares is in
compliance with all applicable laws, regulations of governmental
authority and the requirements of any securities exchange on which
shares of Company Stock are traded. The Committee may, in its sole
discretion, defer the effectiveness of any transfer of shares of
Company Stock hereunder in order to allow the issuance of such shares
to be made pursuant to registration or an exemption from registration
or other methods for compliance available under federal or state
securities laws. The Committee shall inform the Participant in writing
of its decision to defer the effectiveness of a transfer. During the
period of such deferral in connection with the exercise of an Award,
the Participant may, by written notice, withdraw such exercise and
obtain the refund of any amount paid with respect thereto.
12. WITHHOLDING TAXES.
(a) Whenever cash is to be paid pursuant to an Award, the Company shall
have the right to deduct therefrom an amount sufficient to satisfy any
federal, state and local withholding tax requirements related thereto.
(b) Whenever shares of Company Stock are to be delivered pursuant to an
Award, the Company shall have the right to require the Participant to
remit to the Company in cash an amount sufficient to satisfy any
federal, state and local withholding tax requirements related thereto.
With the approval of the Committee, a Participant may satisfy the
foregoing requirement by electing to have the Company withhold from
delivery shares of Company Stock having a value equal to the minimum
amount of tax required to be withheld. Such shares shall be valued at
their Fair Market Value on the date of which the amount of tax to be
withheld is determined. Fractional share amounts shall be settled in
cash. Such a withholding election may be made with respect to all or
any portion of the shares to be delivered pursuant to an Award.
13. NOTIFICATION OF ELECTION UNDER SECTION 83(B) OF THE CODE.
If any Participant shall, in connection with the acquisition of shares
of Company Stock under the Plan, make the election permitted under
Section 83(b) of the Code, such Participant shall notify the Company of
such election within 10 days of filing notice of the election with the
Internal Revenue Service.
12
14. NON-COMPETITION AND CONFIDENTIALITY.
By accepting Awards and as a condition to the exercise of Awards and
the enjoyment of any benefits of the Plan, including participation
therein, each Participant agrees to be bound by and subject to
non-competition, confidentiality and invention ownership agreements
acceptable to the Committee or any officer or director to whom the
Committee elects to delegate such authority.
15. NOTIFICATION UPON DISQUALIFYING DISPOSITION UNDER SECTION 421(B) OF
THE CODE.
Each Agreement with respect to an Incentive Stock Option shall require
the Participant to notify the Company of any disposition of shares of
Company Stock issued pursuant to the exercise of such Option under the
circumstances described in Section 421(b) of the Code (relating to
certain disqualifying dispositions), within 10 days of such
disposition.
16. AMENDMENT OR TERMINATION OF THE PLAN.
The Board of Directors or the Committee may, at any time, suspend or
terminate the Plan or revise or amend it in any respect whatsoever;
provided, however, that the requisite stockholder approval shall be
required if and to the extent the Board of Directors or Committee
determines that such approval is appropriate or necessary for purposes
of satisfying Sections 162(m) or 422 of the Code or Rule 16b-3 or other
applicable law. Awards may be granted under the Plan prior to the
receipt of such stockholder approval of the Plan but each such grant
shall be subject in its entirety to such approval and no Award may be
exercised, vested or otherwise satisfied prior to the receipt of such
approval. No amendment or termination of the Plan may, without the
consent of a Participant, adversely affect the Participant's rights
under any outstanding Award.
17. TRANSFERS UPON DEATH; NONASSIGNABILITY.
(a) Upon the death of a Participant, outstanding Awards granted to such
Participant may be exercised only by the executor or administrator of
the Participant's estate or by a person who shall have acquired the
right to such exercise by will or by the laws of descent and
distribution. No transfer of an Award by will or the laws of descent
and distribution shall be effective to bind the Company unless the
Committee shall have been furnished with written notice thereof and
with a copy of the will and/or such evidence as the Committee may deem
necessary to establish the validity of the transfer and an agreement by
the transferee to comply with all the terms and conditions of the Award
that are or would have been applicable to the Participant and to be
bound by the acknowledgments made by the Participant in connection with
the grant of the Award.
(b) During a Participant's lifetime, the Committee may, in its
discretion, pursuant to the provisions set forth in this clause (b),
permit the transfer, assignment or other encumbrance of an outstanding
Option unless such Option is an Incentive Stock Option and the
Committee and the Participant intends that it shall retain such status.
Subject to the approval of the Committee and to any conditions that the
Committee may prescribe, a Participant may, upon providing written
notice to the General Counsel of the Company, elect to transfer any or
all Options granted to such Participant pursuant to the Plan to members
of his or her immediate family, including, but not limited to,
children, grandchildren and spouse or to trusts for the benefit of such
immediate family members or to partnerships in which such family
members are the only partners; provided, however, that no such transfer
by any Participant may be made in exchange for consideration. Any such
transferee must agree, in writing, to be bound by all provisions of the
Plan.
18. EFFECTIVE DATE AND TERM OF PLAN.
The Plan shall become effective on the Effective Date, but the Plan
(and any grants of Awards made prior to stockholder approval of the
Plan) shall be subject to the requisite approval of the stockholders of
the Company. In the absence of such approval, such Awards shall be null
and void. Unless earlier terminated by the Board of Directors, the
right to grant Awards under the Plan shall terminate on the tenth
anniversary of the Effective Date. Awards outstanding at Plan
termination shall remain in effect according to their terms and the
provisions of the Plan.
13
19. APPLICABLE LAW.
Except to the extent preempted by any applicable federal law, the Plan
shall be construed and administered in accordance with the laws of the
State of Delaware, without reference to its principles of conflicts of
law.
20. PARTICIPANT RIGHTS.
(a) No Participant shall have any claim to be granted any award under
the Plan, and there is no obligation for uniformity of treatment for
Participants. Except as provided specifically herein, a Participant or
a transferee of an Award shall have no rights as a stockholder with
respect to any shares covered by any award until the date of the
issuance of a Company Stock certificate to him or her for such shares.
(b) Determinations by the Committee under the Plan relating to the
form, amount and terms and conditions of grants and Awards need not be
uniform, and may be made selectively among persons who receive or are
eligible to receive grants and awards under the Plan, whether or not
such persons are similarly situated.
21. UNFUNDED STATUS OF AWARDS.
The Plan is intended to constitute an "unfunded" plan for incentive and
deferred compensation. With respect to any payments not yet made to a
Participant pursuant to an Award, nothing contained in the Plan or any
Agreement shall give any such Participant any rights that are greater
than those of a general creditor of the Company.
22. NO FRACTIONAL SHARES.
No fractional shares of Company Stock shall be issued or delivered
pursuant to the Plan. The Committee shall determine whether cash, other
Awards, or other property shall be issued or paid in lieu of such
fractional shares or whether such fractional shares or any rights
thereto shall be forfeited or otherwise eliminated.
23. INTERPRETATION.
The Plan is designed and intended to the extent applicable, to comply
with Section 162(m) of the Code, and to provide for grants and other
transactions which are exempt under Rule 16b-3, and all provisions
hereof shall be construed in a manner to so comply.
14
SUNBEAM CORPORATION
2381 EXECUTIVE CENTER DRIVE, BOCA RATON, FL 33431
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned hereby appoints Steven R. Isko, Paul E. Shapiro and
Barbara L. Allen as Proxies, each with the power to appoint a substitute, and
hereby authorizes them, and each of them, to represent and vote, as designated
below, all the shares of Common Stock of Sunbeam Corporation (the "Company")
held of record by the undersigned on May 8, 2000, at the Annual Meeting of
Stockholders of the Company to be held on June 27, 2000, or any adjournment
thereof.
IF NO DESIGNATION IS MADE, THIS PROXY WILL BE VOTED FOR THE ELECTION OF ALL
DIRECTOR NOMINEES AND FOR THE APPROVAL OF EACH OF PROPOSALS 2, 3, 4, 5, 6, AND
7, AS SET FORTH ON THE REVERSE SIDE.
(To be signed on reverse side)
PLEASE DATE, SIGN AND MAIL YOUR
PROXY CARD BACK AS SOON AS POSSIBLE!
ANNUAL MEETING OF STOCKHOLDERS
SUNBEAM CORPORATION
JUNE 27, 2000
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
FOR ALL WITHHOLD
NOMINEES listed at AUTHORITY
right (except as marked to vote for all nominees
to the contrary below) listed at right
1. Election of [ ] [ ]
Directors
(Proposal No. 1)
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, MARK
THE "FOR ALL" BOX AND WRITE THAT NOMINEE'S NAME IN THE SPACE PROVIDED BELOW.)
- -----------------------------------------------------------------------------
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
NOMINEES: Philip E. Beekman
Charles M. Elson
Howard Gittis
John H. Klein
Jerry W. Levin
David J. Pecker
James D. Robinson III
Faith Whittlesey
FOR AGAINST ABSTAIN
2. To approve the grant of stock options to Jerry [ ] [ ] [ ]
W. Levin, the Company's Chairman and Chief
Executive Officer, pursuant to his Employment
Agreement with the Company (Proposal No. 2).
3. To approve the grant of stock options to Paul E. [ ] [ ] [ ]
Shapiro, the Company's Executive Vice
President and Chief Administrative Officer,
pursuant to his Employment Agreement with the
Company (Proposal No. 3).
4. To approve the grant of stock options to Bobby [ ] [ ] [ ]
G. Jenkins, the Company's Executive Vice
President and Chief Financial Officer, pursuant
to his Employment Agreement with the
Company (Proposal No. 4).
5. To approve an amendment to the Sunbeam [ ] [ ] [ ]
Corporation Management Incentive Plan
(Proposal No. 5).
6. To approve the adoption of the Sunbeam [ ] [ ] [ ]
Corporation Key Executive Long Term Incentive
Plan (Proposal No. 6).
7. To approve the adoption of the Sunbeam [ ] [ ] [ ]
Corporation 2000 Option Plan (Proposal No. 7).
8. To transact such other business as may properly come CHANGE OF [ ]
before the Annual Meeting or any postponement or ADDRESS
adjournment thereof, including matters that the officers of AND/OR
the Company may deem appropriate, and stockholder COMMENTS
proposals, if any, which are required to be included in the MARK HERE
proxy materials by the rules and regulations of the
Securities and Exchange Commission.
Signature __________________________________________ Date: ____________, 2000
Signature, if held jointly__________________________ Date: ____________, 2000
NOTE: When shares held by joint tenants, both should sign. When signed as
attorney, executor, administrator, trustee or guardian, please give full
title as such. If a corporation, please sign in the full corporate name
by the President or other authorized officer. If a partnership, please
sign in partnership name by authorized person.